China’s housing market continues to face challenges despite various government stimulus efforts. According to JPMorgan economist Haibin Zhu, the housing market crash is far from over, and stabilization may not occur until 2025 at the earliest. Recent data has shown that new home sales are experiencing minimal growth, while resale home prices are on the decline.
Ineffectiveness of Government Measures
Despite efforts by the Chinese government to lower homeowner borrowing costs and stimulate homebuyer sentiment, analysts are skeptical about the effectiveness of these measures. The proposed plan to allow refinancing on trillions of dollars in mortgages may not have the desired impact on consumption and housing demand. Lower mortgage rates could lead to reduced deposit rates, affecting interest income on household savings and overall financial stability.
Lingering Crisis in the Housing Market
The challenges facing China’s housing market run deep, with average prices for both new and resale houses experiencing significant drops from a year ago. The sector remains in crisis, with no immediate signs of recovery. JPMorgan’s Zhu highlights that the mortgage refinancing measure is unlikely to address the underlying issues affecting new home demand.
China’s housing market faces ongoing challenges that require a more comprehensive solution. While government stimulus efforts may provide temporary relief, they may not be sufficient to address the fundamental issues plaguing the sector. Effective measures that address the root causes of the crisis and restore consumer confidence are essential for long-term stability in China’s housing market.
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