China’s 2022 property sector outlook worsens, house costs seen falling

September 5, 2022

Surveillance cameras are seen close to residential buildings underneath development in Shanghai, China July 20, 2022. REUTERS/Aly Tune

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  • ballot information
  • House gross sales seen falling at quicker clip in 2022
  • House costs seen easing this 12 months
  • House costs seen rising, gross sales falling in H1 2023

BEIJING, Sept 5 (Reuters) – Woes in China’s residential property market are anticipated to deepen this 12 months as homebuyers stay cautious, with economists now anticipating house costs to fall in 2022 and betting on a quicker drop in property gross sales than beforehand forecast.

New house costs are anticipated to fall 1.4% in 2022, based on a Reuters survey of greater than 10 analysts and economists polled between Aug. 29 and Sept. 2. Within the Could quarterly survey, analysts had anticipated costs to stay unchanged for the 12 months.

Property gross sales have been seen slumping 24.5% in 2022, a far larger drop than the ten% fall forecast within the Could ballot.

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The property sector, which accounts for a couple of quarter of China’s financial system, has lurched from disaster to disaster for the reason that summer season of 2020 after regulators stepped in to chop extra leverage, inflicting some builders to default on their money owed and wrestle to finish tasks, leading to homebuyers threatening to cease making funds.

The struggling sector is weighing on the outlook for the world’s second-biggest financial system, which narrowly escaped a contraction within the second quarter as a result of widespread COVID-19 lockdowns. learn extra

“Uncertainty over China’s development prospects and considerations about mission incompletion will largely drive weak homebuyer demand over the subsequent 6-12 months,” stated Daniel Zhou, an analyst at Moody’s in a analysis word.

“COVID-19 disruptions to enterprise exercise and gross sales execution may also dampen client sentiment, whereas consumers’ expectation of weaker property costs will delay property purchases.”

Whereas authorities have taken a collection of measures to prop up the sector this 12 months, analysts within the Reuters ballot stated extra was wanted.

Greater than 200 cities have launched measures to assist the property sector, similar to offering money subsidies and permitting smaller down funds for home purchases. China’s central financial institution additionally minimize benchmark lending charges on Aug. 22 to scale back prices for homebuyers.

“A number of easing coverage measures are wanted to stabilise the property sector, similar to enjoyable curbs on buy, re-selling and lending in second-tier cities,” stated Huang Yu, an analyst at actual property analysis agency China Index Academy.

“China should additionally step up financing for some builders and guarantee housing tasks which haven’t but been completed are delivered to consumers.”

Subsequent 12 months, economists anticipated house costs to enhance however gross sales to stay downbeat.

New house costs have been seen rising 2.0% year-on-year within the first half of 2023, however gross sales have been anticipated to fall 15% as a result of ongoing sluggish demand, based on the Reuters ballot.

“The tempo of restoration of the actual property market continues to be depending on the tempo of macroeconomic situation, Covid-19 management restrictions and the power of coverage help,” Yu added.

(For different tales from the Reuters quarterly housing market polls:)

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Reporting by Liangping Gao, Shuyan Wang and Ryan Woo; Modifying by Ana Nicolaci da Costa

Our Requirements: The Thomson Reuters Belief Ideas.

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