Real estate is an important pillar of China's economy and a carrier of wealth for many families. However, in recent years, China's real estate market has faced unprecedented difficulties, with issues such as tightening policies, financing difficulties, sluggish sales, and excess inventory plaguing developers and home buyers. Has China's real estate market come to an end?What does the future hold?
In its latest report, China Property Watch: The property market may gradually and slowly recover in 2024, S&P said that the good news for Chinese property developers is that the industry is about to bottom. The bad news is that the level of industry development is likely to continue to hover around the bottom line in the coming years.
S&P Credit analyst Ricky Tsang said: "China's real estate will recover in an orderly manner. Policymakers are the first to take steps to get first-tier cities to take the lead in restoring a virtuous cycle. The latest market performance suggests that market sentiment, contracted sales, and ** have begun to normalize. ”
S&P's view is supported by other institutions. Zhu Haibin, chief economist of JPMorgan Chase & Co. Asia Pacific, believes that China's real estate market has entered a stage of structural adjustment, but there will be no major risk of collapse. He pointed out that the fundamentals of supply and demand in China's real estate market are still healthy, the urbanization process is still continuing, residents' income and savings levels are still improving, and real estate financial risks are still under control.
In the report, S&P further analyzed the path and speed of recovery in China's real estate market. The report believes that the recovery of China's property market will be a gradual and slow process. Policymakers first take steps to restore health and stability to first-tier cities.
We see that consumer confidence, home sales and ** in first-tier cities have begun to stabilize. The stability of the high-tier property market may boost confidence in the lower-tier property market. "With the recovery of the first-tier property market, home buyers will be more confident to turn to the lower-tier property market. S&P expects China's real estate market to begin a slow recovery in 2024, with annual sales reaching an equilibrium of 10 trillion to 11 trillion yuan.
S&P's** is similar to the expectations of other agencies. Hua Changchun, chief economist of Guotai Junan**, said that the cyclical adjustment of China's real estate market will end in 2024, when the growth rate of real estate investment will rebound to about 5%, and the growth rate of real estate sales will rebound to about 10%. He believes that the long-term trend of China's real estate market is still positive, and the future growth momentum will come from factors such as urbanization, demographics, income growth and policy adjustments.
S&P noted in the report that the downturn in China's real estate market will intensify the fragmentation and competition among property developers. The gap between state-owned and private real estate developers will widen further.
State-owned developers have been more focused on the high-end real estate market, which is a significant advantage in the current market downturn. These entities also have relatively smooth access to finance, while many private developers are facing financing difficulties. Recently, a series of debt defaults by large private real estate companies have hit market confidence.
S&P believes that all property developers must manage effectively against the slowdown in sales, and that developer leverage will remain high for the next two years.
The future of the real estate market depends on many factors In summary, the report of S&P Ratings gives the current situation, trends and outlook of China's real estate market. According to the report, China's real estate market is about to bottom out, and the overall property market will recover quarter-on-quarter, but the speed and strength of the recovery will be limited.
The report also points out that property developers face fragmentation and challenges, requiring effective risk management and business adjustment. The views and ** of the report are basically in line with the analysis of other institutions, reflecting the consensus and expectations of the market.
Of course, the future of the real estate market depends on many other factors, such as economic growth, policy changes, financial conditions, consumer demand, etc. Changes in these factors may have different impacts on the real estate market or trigger new opportunities and challenges.
Therefore, we need to pay close attention to the dynamics of the real estate market and adjust our investment and consumption strategies in a timely manner to adapt to changes in the market. What are your thoughts and expectations for the real estate market?Feel free to leave a message in the comment area to share your views and suggestions.