China’s house price outlook for 2024 and 2025 worsens: Reuters poll By Reuters

By Liangping Gao and Ryan Woo

BEIJING (Reuters) – China’s house prices will fall at a faster pace than previously estimated for this year and next, a Reuters poll showed, as supportive policies from Beijing scramble to help the sector real estate to find a low level.

The survey showed home prices will fall 8.5% in 2024, down from a 5.0% decline indicated in a previous survey in May. Prices are likely to fall 3.9% in 2025 from an unchanged figure estimated in May.

“The real source of funding for real estate developers has shrunk more seriously, affecting the release of housing demand,” said Ma Hong, senior analyst at the GDDCE Research Institution.

“My house price forecasts have been revised downwards since May as cash flow pressures on some large real estate companies will continue to increase, widening risk exposure and putting pressure on housing market confidence,” Ma said.

A protracted housing crisis in 2021 has led to a bloated inventory of unsold apartments, which has crippled developers’ cash flows and greatly affected housing prices, consumer confidence and economic activity.

Chinese policymakers have stepped up efforts to support the sector, which at its peak accounted for a quarter of the economy, including lowering mortgage rates and reducing the cost of buying homes.

The August 26-29 survey of 10 analysts showed property sales were likely to fall 16.0% in 2024, stronger than the 10.0% decline forecast in the previous survey, while investment was expected to fall up 10.3% from the 10.0% decline forecast in May.

“The uncertainty of the economic environment also has a negative impact on home buying decisions. Despite the continuous rollout of supportive policies, they are not strong enough to reverse the downward trend,” said Wang Xingping, senior analyst at Fitch Bohua.

Chinese leaders pledged in July to continue supporting the delivery of unfinished projects and converting unsold apartments into affordable housing to support the sector.

Beijing’s plan to fix its property mess is off to a slow start. Only 4 percent of a 300 billion yuan ($42.30 billion) loan scheme to help clean up housing stock has been drawn by local governments and state-owned firms, central bank data showed.

UBS Investment Bank this week cut its 2024 and 2025 forecasts for China’s GDP growth to 4.6% and 4%, from 4.9% and 4.6% respectively, due to a further housing slump deeper than expected.

The bank expects more supportive policies for the rest of 2024, including faster fiscal spending, more government bond issuance, an expansion in equipment and upgrading and durables trading, a bit more monetary easing.

(More stories from Reuters Global Housing Survey Q3)

($1 = 7.0914)