China's property market is undergoing significant changes as cities like Zhengzhou lift price restrictions on new home sales. This trend is expected to spread, potentially leading to further price drops as developers clear inventory. The move comes as China's once-booming property sector faces a prolonged slump since 2021, affecting the broader economy. In response, Chinese leadership is granting cities more autonomy in regulating real estate markets and pledging support for unfinished projects. While these measures aim to stabilize the sector, experts warn that without substantial stimulus, the market will remain challenging. Weak buyer confidence, largely due to concerns about timely home delivery, continues to impact the industry's recovery.
China's property market is undergoing significant changes as cities across the country ease restrictions on home sales. Zhengzhou, a central Chinese city, has recently lifted limits on maximum and minimum prices for new homes, allowing developers to set their own prices. This move follows similar actions in other cities like Shenyang and Lanzhou earlier this year.
Experts predict that more Chinese cities will follow suit, potentially leading to further declines in property prices in the near term. Ma Hong, a senior analyst at GDDCE Research Institution in Shanghai, suggests that property companies may reduce prices to clear their inventory. While this could negatively impact homeowners' wealth, Ma believes it will have a limited effect on home purchases due to weak buyer confidence. The Chinese property sector, which once contributed to a quarter of the country's economy, has been struggling since 2021.
This downturn was partly caused by efforts to reduce high leverage, resulting in bond defaults and numerous unfinished pre-sold homes. The situation has significantly affected the overall economy and consumer confidence. In response to these challenges, China's leadership is taking steps to address the property market issues. A recent key meeting of the Communist Party's Central Committee, led by President Xi Jinping, indicated that cities would be given more autonomy to regulate their real estate markets. This includes the option to cancel or reduce housing purchase restrictions. Chinese leaders have also committed to supporting the completion of unfinished projects and converting unsold apartments into affordable housing. Goldman Sachs anticipates further reductions in mortgage rates, increased government funding, and streamlined operations to help reduce housing inventory.
Despite these measures, Ma Hong cautions that without substantial stimulus to improve real estate companies' liquidity, the overall property market situation will remain challenging. The ongoing concerns about timely delivery of new homes continue to affect buyer confidence. As China navigates these property market reforms, the balance between stabilizing the sector and avoiding further economic disruption remains a critical challenge for policymakers and industry stakeholders alike.
Advertisement
Facebook
Whatsapp
