Written by Hei Takahashi and Ryan Wu
BEIJING (Reuters) – China's fragile housing market started this year with a slowing decline in real estate investment and sales, helped by government efforts to stem a prolonged real estate recession, but analysts say He was still cautious about ending the recession.
According to data from the National Bureau of Statistics (NBS), real estate investment in China decreased by 9.0% year-on-year in the first two months of 2024, compared to a 24.0% decline in December 2023.
Real estate sales by floor area decreased by 20.5% from the same month last year in January to February, compared to a 23.0% decrease in December last year.
Official property figures released last week showed house prices fell 0.3% month-on-month in February, matching January's decline and showing the sector is struggling to stabilize.
Nie Wen, an economist at Fabao Trust, said real estate is still on the decline and developers are still struggling with cash flow, so a slight slowdown in investment is unlikely to change the situation. .
“However, we believe we have passed the stage where real estate had the most negative impact on the economy, and we need to see when the real estate sector will bottom out,” Nee said.
China is stepping up measures to revitalize its fragile real estate sector after a regulator's crackdown on developer leverage snowballed into a liquidity crisis.
In January, authorities launched a so-called “whitelist” mechanism to direct state bank funds to local real estate projects that city governments have certified as warranting loan support.
Last month, China announced its biggest cut in benchmark mortgage rates to support the mortgage sector.
But market participants remain largely unperturbed as home purchases, loans and construction starts for real estate companies continue to decline.
“The future of real estate will depend on investment in three key projects: affordable housing construction, urban village renovation, and urgent public infrastructure construction.” It depends on whether we can offset it,” Nee said.
Household lending, mainly mortgages, fell by 590.7 billion yuan ($82.08 billion) in February after increasing by 980.1 billion yuan in January, according to Reuters calculations based on central bank data.
New construction starts, measured on a floor space basis, decreased by 29.7% year-on-year, after declining by 11.56% in December 2023.
Funds raised by Chinese real estate developers fell 24.1% year-on-year, following a 17.8% drop in December last year.
“Further support for the real estate sector is still needed,” HSBC economists said in a research note.
HSBC said further policies that remove home purchase restrictions in more cities and provide direct government support to increase the supply of social housing would ultimately help stabilize the sector.
(1 dollar = 7.1970 Chinese Yuan)
(Reporting by Qiaoyi Li, Liangping Gao, Ryan Woo; Editing by Sam Holmes)
