China is facing an increasing problem with the real estate market, according to data published by the Chinese National Bureau of Statistics. Prices for new apartments fell in May for the twelfth straight monthThe pace of these declines was the worst in nearly a decade – Bloomberg reports.
Price reductions were recorded in as many as 67 of the 70 cities monitored, the worst result since 2015. Price reductions in smaller cities were particularly severe.
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China has a problem with its real estate market
There is more bad news. From January to May 2024 Real estate investments fell at a record pace. In the past, the worst data from the country only came during the darkest period of the COVID-19 pandemic.
Analysts doubt whether modest interest rate cuts will be able to stimulate the market, given the high level of liquidity in the sector. The 7-day average interbank repo rate remains near its lowest level since January.
This data shows that the Chinese The real estate industry is still in serious crisis. Experts estimate that MrThe prospects for market recovery are not goodFurther policy easing by the authorities will likely not be enough to quickly reverse negative trends in this key sector of the Chinese economy.
China wants to save this sector
In mid-May, authorities in Beijing announced a wide-ranging stimulus package aimed at stimulating activity in the Middle Kingdom’s housing market. This decision reflects China’s deep concern about the state of this key economic sector. According to analysts, this is the largest government intervention in this area since the great financial crisis.
The package provides great importance Easing credit policy. Central Bank of China Reduced minimum private contribution requirements When purchasing real estate to a record low of 15%. In the case of purchasing a second apartment, this requirement has also been reduced by 5 percentage points – to 25%. In addition, local authorities retain discretion in setting final interest rates for mortgage loans.
Recapitalization of development companies
Moreover The Chinese government has allocated $42 billion to finance the central bankWhich the development companies will use to buy the surplus unsold apartments. The requisitioned buildings will then be converted into social housing. According to industry experts, this measure is reminiscent of the bailout of financial institutions during the global crisis years ago.
China is the world’s largest importer of raw materials, so the improvement of the situation in the local real estate market may have a significant impact on the economic situation in other countries. According to analysts, Beijing’s actions are an important signal for the entire global economy.
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