What’s ailing China’s housing market? A teacher, clerk and tutor show why the next home sales reports could be ugly
- Home sales likely stumbled in June and will weaken in subsequent months, analysts forecast; JPMorgan sees the market stabilising at a low level after 2022’s crash
- China’s policy responses may not help at all, until consumers regain confidence home prices can sustain an uptrend, Nomura says
Stressed by the impact of Covid-19 on job security and economic fallout, the teacher in her 30s is struggling with the decision, unsure of when she will start looking for one in the district, home to top primary and secondary schools and where Peking University and Tsinghua University are located.
“The pandemic has brought about too many uncertainties and I don’t feel now is the right time to buy a home,” she said, worrying about the family’s future income stability. “We will just wait until we save up enough for a decent home, rather than rushing for something small and old. We don’t want to lower our quality of life.”
That hesitation does not bode well for China’s housing market, a pillar of the economy that is cracking under the weight of shrinking demand and weaker prices. Liquidity crunches and debt defaults among the nation’s private developers, from China Evergrande Group to Kaisa Group, have dented confidence among buyers as home delivery suffered.
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The average of weekly property sales across 50 leading cities in the first three weeks of June was 20 per cent lower than the same period last year, Nomura said, citing local data provider CRIES. S&P Global Markets forecasts property sales to shrink by as much as 5 per cent to 13 trillion yuan (US$1.8 trillion) in 2023, on top of an official 28 per cent slump in 2022.
