Is the turning point of China's real estate market yet to come?

According to Fitch Ratings, new home prices in China are expected to fall 5% in 2025, sales will fall 10%, while the real estate market still faces great uncertainty.

China's real estate market remains in trouble, with recovery slow and only taking place in major cities - Photo: REUTERS

In September 2024, the Chinese government launched its largest real estate stimulus measure, but the pace of stabilizing the real estate market remains slow.

Fitch Ratings, the international credit rating agency, believes that China's years-long property market crisis is expected to continue to spread into 2025.

Bloomberg news agency quoted Wang Ying, managing director of Fitch Ratings in Shanghai, as saying that according to official statistics, new home prices in China are expected to fall another 5% in 2025, almost the same as this year. New home sales are also expected to fall another 10%.

Ms. Wang believes that the turning point of China's real estate industry has yet to come, and whether the recent upturn in China's real estate market can be sustained remains an uncertain question.

Although the Chinese government has launched a series of stimulus policies, the recovery in real estate sales has so far been mainly concentrated in first-tier cities and has not spread to smaller cities.

More worryingly, secondary market home prices continue to fall, while the number of homes waiting to be sold continues to rise. This shows that even the real estate market in first-tier cities, which has received much attention, has not yet reached its lowest level of stability, Ms. Vuong said.

This will put further pressure on the banking sector, which has been hit by falling profits and rising bad debts in recent years.

Fitch Ratings Asia- Pacific Director Xue Huiru said that in the third quarter of this year, the net interest margin of Chinese banks fell to 1.5%, the lowest in the Asia-Pacific region, and is likely to continue to narrow by 2025.

Mr. Xue said that in recent quarters, the non-performing loan ratio for residential mortgages in China has increased by 10-20 basis points, mainly due to falling incomes and concerns about delayed housing projects, which have discouraged homebuyers from repaying their mortgages.

In September 2024, China announced a policy package to stimulate the real estate market, including cutting interest rates on existing mortgages, easing home purchase regulations in major first-tier cities, and reducing taxes on home purchases.

According to the latest data from the National Bureau of Statistics of China, from January to October 2024, the area of new commercial housing sales decreased by 15.8% year-on-year, of which the area of residential housing sales decreased by 17.7%.

Revenue from new commercial housing sales decreased by 20.9% year-on-year, while revenue from residential housing sales decreased by 22.0%.

Source: https://tuoitre.vn/buoc-ngoat-cua-thi-truong-bat-dong-san-trung-quoc-van-chua-toi-20241129221510631.htm