Real estate market in China showing possible signs of revival, according to analysts' assessments
Improved Forecast for China's Property Market: Consolidation and Government Measures Boost Confidence
In a surprising turn of events, Fitch Ratings, a renowned credit-rating agency, has revised its forecast for China's property market. The agency now expects a slower decline in new home sales and a more stable outlook for the sector compared to previous predictions.
The revised forecast is attributed to several factors, with the consolidation of the property market and the expansion of market share by the top 15 state-owned developers being key contributors. Over the past year, these developers have significantly increased their market share, growing from 15% four years ago to 23% in the first half of this year.
This consolidation and shift in market share have been instrumental in stabilizing China's property sector. The top 15 state-owned developers have been able to absorb some of the market volatility, contributing to a more stable environment.
HSBC has also noted that the market has consolidated rapidly since the property crisis began in 2021. This consolidation, along with government support measures, has led to a shrinking inventory of unsold homes and a slower rate of sales decline overall.
One of the significant government measures has been the relaxation of home purchase rules in higher-tier cities, such as Beijing. These changes have made it easier for more residents to buy homes and improved financing conditions. For example, Beijing recently eased restrictions allowing both residents and non-residents who have paid social insurance or taxes for at least two years to purchase unlimited numbers of homes outside the fifth ring road. Additionally, the upper limit for second-home housing provident fund loans was increased significantly, and down payment requirements for second homes were standardized at a lower threshold (no less than 30%) regardless of location.
These policies have helped reduce unsold inventory, maintain market liquidity, and boost sales. Analysts also note that these measures have led to signs of market bottoming, especially in larger, higher-tier cities where policy easing has had more effect.
Despite these improvements, challenges remain for smaller cities and the secondary market, where price dips continue. However, the policy relaxations in major cities aiming to increase home purchase opportunities and ease financing constraints have been a key factor in arresting further deterioration and gradually stabilizing China's property sector.
In summary, the improved forecast for China's property market is due to several factors, including the consolidation of the property market, the shift in market share towards the top 15 state-owned developers, and government measures such as relaxed purchase rules and improved financing conditions. These measures reflect a government strategy to support housing as a place to live rather than purely speculative investment, balancing market recovery with financial stability.
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The revised forecast for China's property market, driven by factors like consolidation and government measures, has boosted investor confidence in the business sector. The expansion of market share by the top 15 state-owned developers, seen as key contributors to this consolidation, has significantly impacted the industry. The financial stability of China's property market, in turn, affects the broader economy, impacting industries like finance.
