China property recovery elusive despite relief, say S&P, Fitch; others see bright spots

S&P Global and Fitch Ratings have cut China’s property sales forecasts for the second half of 2024, but others say positive signs are emerging in the crisis-hit sector

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The photo taken on June 5, 2024 shows property for sale at a real estate agent’s window in Tianjin. Photo: AFP

Published: 8:30am, 21 Jun 2024

Beijing’s most ambitious attempt yet to support China’s slumping property market was panned by S&P Global and Fitch Ratings, as the two agencies predict more downside for the crisis-hit sector, in sharp contrast with some analysts who feel that the worst might be over.

S&P Global on Thursday downgraded its projections of new home sales for 2024 on concerns that homebuyer confidence will remain lacklustre, and demand, especially in lower-tier cities, will not recover sufficiently.

“We expect that in the second half of 2024, China’s property sector will continue to decline despite the new round of policies, with sales expected to drop 15 per cent compared to last year, which is a downward adjustment compared to a projected 5 per cent drop [made] at the end of 2023,” said Renyuan Zhang, director of corporate ratings at S&P Global (China) Ratings.

China’s home prices saw their steepest decline in close to a decade in May, with new home prices in 70 cities sliding 0.71 per cent from April, while prices of pre-owned homes also fell 1 per cent on a monthly basis, according to official data.

Residential buildings in Beijing, China, on Wednesday, May 29, 2024. China’s capital city Beijing will allow families to buy one more home in noncore areas, as the nation’s largest cities are buckling under the pressure of a record real estate downturn. Photo: Bloomberg

Overnight, Fitch Ratings made a similar cut. It now expects new home sales to decline by up to 20 per cent to 8.3 trillion yuan (US$1.1 trillion) in 2024, with sales expected to drop 10 to 15 per cent in gross-floor-area terms to between 800 million and 850 million square meter-range.

“This reflects a lower sales trend in the first four months than our previous forecast of a 5 to 10 per cent decline in sales, as well as more pronounced downward pressure on new home prices,” said Tyran Kam, senior director of Asia-Pacific corporate ratings at Fitch.