China real estate continues gloomy trend

Ten investment banks and securities companies such as Goldman Sachs, Morgan Stanley and UBS… all predict that China's housing construction market will continue its gloomy trend in 2024.

The report stressed that if the forecasts of the investment banks and securities companies are correct, China's housing construction growth will shrink for three consecutive years, the longest consecutive period of decline. The key index of real estate investment in China in the first 11 months of this year fell 8% compared to the same period last year. This index fell 8.4% last year. The less optimistic outlook shows that although the Chinese government has introduced a series of measures to revive home buying demand, the downward trend of the real estate market has not ended.

The forecasts by Goldman Sachs economists are among the most pessimistic. They predict that China’s real estate fixed asset investment will shrink by double digits in 2024, while emphasizing that the prolonged sluggishness of the real estate market will reduce China’s real GDP growth by 1%.

Construction site of the Country Garden project in Tianjin, China. Photo: REUTERS

The continued weakness in China’s property market means the sector’s role in driving demand for goods and services is weakening. Bloomberg Economics estimates that property-related demand now accounts for about 20% of China’s GDP, down from 24% in 2018.

According to economists at CITIC Securities, the main reason for the pessimistic view is the sharp decline in new real estate projects starting in 2023. This means that the number of completed projects will decrease. Another reason is that the decline in real estate sales has weakened the motivation of developers to start construction.

The slowdown in China’s property market will have a wider impact. Due to the industry’s large size, the slowdown in construction activity has been one of the main reasons for weak domestic demand, leading to deflation in China this year.

MINH CHAU

Source: https://www.sggp.org.vn/bat-dong-san-trung-quoc-tiep-tuc-xu-huong-am-dam-post720464.html