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China Property Could Rebound in 2nd Half Despite Debt Woes

The heavily indebted sector faltered last year as Beijing mounted a deleveraging campaign that caught out numerous developers

China Evergrande
The property market ended last year with the worst declines in new home prices in nearly nine years.


Shaken by a liquidity crunch among developers, China’s property market is expected to stay soft in the first half of 2022 before rebounding later in the year as policies aimed at encouraging buyers helps sentiment recover, a Reuters poll showed.

Having been a pillar of strength for the world’s second largest economy, the heavily indebted property sector faltered last year as Beijing mounted a deleveraging campaign that caught out many developers.

Aside from struggling with a rapidly cooling property sector, China has also encountered sporadic Covid-19 outbreaks that could deal a blow to factory output and consumption.

Average home prices are estimated to fall 1% on year in the first half, according a Reuters survey of 17 analysts and economists conducted from February 16-23. The estimate was unchanged from that of a Reuters poll in November.

For the full year, home prices are expected to rise 2%.

“Home prices are likely to rise if curbs are relaxed,” said Li Qilin, chief economist at Hongta Securities, adding the credit environment and regulatory policies on real estate have marginally eased since the beginning of this year.

“Property transactions in first- and second-tier cities, supported by their economic and demographic advantages, will be remarkably better than third- and fourth-tier cities.”


Slew of Measures

Authorities have unveiled a slew of measures to boost sales and sentiment, including giving developers easier access to escrowed pre-sale funds, requiring smaller down-payments for first-time home buyers, and allowing banks to lower mortgage rates.

Analysts are more upbeat on housing demand and supply than in the last Reuters survey, though they said sentiment has not fully recovered and real estate firms still face financing pressure.

For demand, property sales are seen slumping 14% in the first half, narrowing from a 16% fall in November’s poll. Sales are expected to decline 7.5% for the full year.

Many respondents said policies regulating demand, especially genuine demand, will be loosened, but for now sellers were relying on offering discounts.

“Home buyers’ confidence has not yet been restored, and discounts are still a key marketing tool,” said Huang Yu, vice president of China Index Academy, a Beijing-based property research institute.

China’s housing minister pledged on Thursday to keep the real estate market stable this year and ensure genuine demand for homes is met.

“Real estate companies with capital pressure will move cautiously on land purchases and property investment,” Lu Wenxi, chief analyst with property agency Centaline, said.


  • Reuters, with additional editing by George Russell




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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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