China’s real estate market is expected to be stable in 2025 | Real Time Headlines

Three research firms forecast this month that China’s troubled property sector may not start to improve until the second half of next year, even with the latest stimulus measures.

After months of incremental measures, China’s President Xi Jinping A high-level meeting was held at the end of September, vowing “Stop the Housing Market Slump.” earlier this month, The Ministry of Finance introduces more Measures aimed at stabilizing the real estate industry.

Goldman Sachs analysts said in a report on October 22 titled “China Real Estate Outlook 2025: The Bottom Is in Sight”, “With the support of a comprehensive and coordinated easing plan, we have finally reached an inflection point in the continued downward trend of the real estate market. ”.

“This time is different from the previous piecemeal easing measures,” the report said.

Analysts expect China’s housing prices to stabilize by the end of 2025 and rise by an average of 2% two years later. Goldman Sachs predicts that property sales and new home construction are unlikely to stabilize before 2027.

S&P Global Ratings and Morgan Stanley also released reports this month predicting that China’s real estate market will bottom out in the second half of 2025.

Edward Chan, director of S&P Global Ratings, and his team said in a report on October 17: “If the government continues to prioritize supporting developer financing and destocking, we believe property sales and prices may stabilize in the second half of 2025. They warned it would take time for the policy to take effect.

Beijing has made clear that its efforts to support the struggling real estate sector are secondary to its goals.f Support advanced manufacturing as a new driving force for growth. But this is not an easy task, because real estate once accounted for more than a quarter of domestic gross product and is closely related to household wealth and local government finances. China’s debt-ridden developers Delivery of pre-sale homes increasingly difficultsuppressing consumer sentiment.

Analysts are watching closely There will be a parliamentary meeting next week Any details on fiscal spending to reduce housing stock.

Goldman Sachs’ forecast assumes an additional 8 trillion yuan ($1.12 trillion) in fiscal spending, but the exact amount has not yet been announced.

“Without such stimulus, the housing downturn could extend for another three years,” Goldman Sachs analysts warned. Such support would be needed to address developers’ liquidity issues, reduce the inventory of unsold homes and Ensure delivery of pre-sold but unfinished homes.

Homes in China are often sold before they are completed. The business model proved unsustainable after Beijing cracked down on developers’ heavy reliance on debt for growth, and homebuyer demand fell as economic growth slowed.

Nomura Securities estimated at the end of last year About 20 million pre-sale homes remain unfinished. Last month, officials said About 4 million households This year’s whitelist program has been completed and delivered to buyers, with accelerated financial support promised.

Back in June, even before the latest stimulus measures were announced, Morgan Stanley expected inventory destocking to lead to “a rebound in real estate loan demand in late 2025 or 2026.”

Analysts estimate that about 30% of unsold inventory will never be sold, requiring banks or other unspecified entities to bear the cost.

China’s latest measures to boost confidence have boosted the property market. Data from the China Index Academy, a real estate research company, showed that real estate sales in 22 major cities fell by about 4% annually in October, which was much smaller than the more than 25% drop in September.

S&P expects property sales in China to fall to about 9 trillion yuan or less this year and then further to 8 trillion yuan in 2025 – less than Half of the 2021 sales of 18 trillion yuan.

Analysts attributed the sales decline to a growing inventory of unsold homes, which continues to force developers to cut prices to attract buyers and reduce inventory.

September, China’s Top 100 Real Estate Sales Developers S&P quoted China Real Estate Information data as saying that the year-on-year decrease was 37.7%, the largest decline since April this year. This is not a one-month plunge. Data show that sales in the first nine months of this year fell by 36.6% year-on-year.

S&P Global analysts said the deterioration in sales has also further hurt developers’ liquidity, leading to a “lack of confidence” among developers and a “cautious approach” to land acquisitions and launching new projects.

According to S&P Global’s analysis of official data from the National Bureau of Statistics, the number of new construction projects in 2023 has dropped by 42% from the peak in 2019, and in the first eight months of 2024, it has further declined by 23% year-on-year.

In one of the few measures targeting stocks announced so far, the People’s Bank of China Commitment of 300 billion yuan in May Provides refinance loans to state-owned enterprises to purchase unsold completed houses and convert them into affordable housing.

“While helpful, it represents only a small portion (4-6%) of completed housing stock,” S&P said.

Morgan Stanley analysts said in a report on Sunday that recent meetings with banks in Zhejiang province, one of China’s wealthier provinces, indicated they were not yet participating in the government’s new loan program for housing inventory purchases.