How to look at the prediction that the chinese house prices are expected to stabilize around 2026
Background and detailed description of events
On 23 november 2023, cti issued a study indicating that chinese house prices were expected to stabilize around 2026. This projection is based on international experience and current policy developments and market performance in china's real estate market。
In five countries, including the united states, japan, russia, spain and thailand, cicad analysed the characteristics of the downward cycle of housing prices, and found that those countries typically had a housing price adjustment cycle lasting from 5 to 10 years, during which the average decline in housing prices was between 20 and 40 per cent. Since entering the adjustment period, the chinese real estate market has fluctuated over several years, with a decline of nearly 15 per cent. On the basis of these international cases, chongryon predicts that china's housing price adjustment cycle will follow a similar pattern, with the prospect of ending the next cycle around 2026 and ushering in a new phase of stabilization。
Since the meeting of the political bureau at the end of september 2023, when the aim was to contribute to the stabilization of the real estate market, policies at the central and local levels have continued to be put in place with a view to promoting a significant increase in market performance. Policies introduced at the central level include special debt collection, monetization of sheds, real estate tax adjustments, etc., while at the local level they continue to be optimized in the areas of restricted purchases, down payment ratios, etc。
The data show a 5. 0 per cent increase in the number of new settlements in the 40-city focus in october, a 23. 8 per cent increase in the number of used rooms in the 13-city focus, and a significant increase in the market landscape. Four first-line cities have completely eliminated ordinary and non-general residential standards, further reducing the tax burden on home buyers and stimulating market dynamism。
Analysis of impact factors
Policy considerations
Policies at the central and local levels are one of the key factors in the recovery of housing prices in china. Policies such as special debt collection at the central level, monetization of sheds, etc. Provide liquidity support to the market and help ease financial pressure on housing enterprises. Optimistic measures at the local level, such as limiting purchases and down payment rates, have lowered the threshold for home purchases and stimulated market demand。
Moreover, adjustments in tax policies have had a positive impact on markets. Four major first-line cities abolished general and non-general residential standards, harmonized value-added tax policies for the sale of housing by individuals and reduced the tax burden on home buyers. Together, these policies have effectively stabilized market expectations and enhanced market performance。
Economic factors
Steady macroeconomic growth is an important basis for the recovery of housing prices. Economic growth can boost the real estate market by boosting income growth and increasing the capacity to purchase housing. In addition, sound adjustment of financial policies has important implications for housing price trends. For example, lowering the interest rate on loans and easing the terms of loans can reduce the cost of house purchases and stimulate market demand。
However, protection against deflation risks is also an important consideration of current policies. In a deflationary environment, income growth slowed and the ability to buy housing decreased, putting pressure on the real estate market. Policymakers therefore need to strike a balance between promoting economic growth and protecting against deflation risks。
Market supply and demand factors
The supply-demand relationship in the real estate market is one of the key determinants of housing price trends. Housing needs in the core cities continue to grow as urbanization accelerates and migration drives. However, the limited availability of land has led to a relative shortage of housing, pushing up housing prices。
In recent years, the government has increased its regulation of the real estate market, curbing speculative demand for housing by limiting purchases, limiting loans, and promoting a return to rationality. At the same time, by increasing the supply of rental housing and promoting the rehabilitation of old and old neighbourhoods, the supply of housing is being increased to alleviate the supply and demand tension. These measures help to stabilize housing price expectations and promote healthy market development。
International experience
Based on international experience, the cicad study noted that housing prices in the five overseas countries were going down from about 5 to 10 years, falling from 20 to 40 per cent. These countries have contributed to the stabilization of the real estate market through the adoption of liberal monetary and fiscal policies, taking over the risk owners and reducing the cost of home purchases. These experiences have provided useful lessons for china, helping policymakers to better capture market dynamics and develop effective policy measures。
Projection point assessment and impact analysis
The projections of cicad provide an important reference for home buyers, businesses and policymakers. For home buyers, this forecast helps them to better capture market trends and to develop sound housing purchase plans. For housing enterprises, this projection helps them to adjust their business strategies to market changes. For policymakers, this projection helps them to better grasp the market situation and develop effective policy measures。
Buyer level
The purchaser may make reasonable arrangements for the purchase of the house based on a forecast of the construction of the building. If the projections materialize, it is expected that in the coming years the prices will gradually stabilize and that buyers will be able to enter the market at the right time. At the same time, buyers can also follow policy developments and market changes and adjust their purchase plans in a timely manner。
Housing level
Housing enterprises can adjust their business strategies based on the projections of the build-up of china. The real estate market is expected to warm up in the coming years, and housing firms can increase their investment and increase their market share. At the same time, housing enterprises can also focus on policy developments and market changes and adapt product structures and marketing strategies in a timely manner to changing market demand。
Policymakers level
Policymakers can develop effective policy measures based on the projections of chinese-chinese confidence-building. In the coming years, the government could continue to put in place policy measures to promote the healthy development of the real estate market, including optimizing land supply, adjusting tax policies and strengthening financial regulation. At the same time, governments could strengthen market regulation, combat speculative home purchases and maintain market order。
Response strategies and recommendations
Buyer
Focus on policy developments: buyers should closely follow policy developments and learn about changes in government regulatory measures and tax policies in the real estate market in order to adjust housing purchase plans in a timely manner。
Rational house purchases: house buyers should take a rational view of the housing price trends and avoid blind and wind buying. When purchasing a house, the right type and location of the house should be selected, taking into account its economic strength and the need to purchase it。
Diversification: home buyers may consider investing in other areas, such as equities, funds, bonds, etc., in order to diversify assets and reduce investment risk。
Housing
Adapting business strategies: housing enterprises should adapt their business strategies in a timely manner in response to market and policy changes. In the lower cycle of housing prices, housing enterprises should increase their investment and increase their market share; in the upper cycle of housing prices, housing enterprises should pay attention to the improvement of product quality and brand image。
Optimizing product structures: housing enterprises should optimize product structures in the light of changing market demand. For example, in the context of growing demand for rental housing, housing enterprises can increase investment and development in rental housing。
Strengthening risk management: housing enterprises should strengthen risk management against market risks, financial risks, etc. For example, financial risk can be reduced by diversifying access to finance, optimizing the financial structure, and reducing market risk by strengthening market research and improving product quality。
Policymakers
Improving the policy system: policymakers should improve the real estate policy system, including land policy, tax policy, financial policy, etc. Promote healthy development of the real estate market by optimizing the policy mix。
Strengthening market regulation: policymakers should strengthen market regulation to combat speculative house purchases, house prices, etc. The legitimate rights and interests of home buyers are guaranteed by maintaining market order。
Promoting industrial upgrading: policymakers should promote the upgrading and transformation of the real estate sector and encourage the development of housing enterprises in areas such as green buildings, intelligent homes, etc. Promote sustainable development of the real estate market by increasing the value added and competitiveness of industry。
In summary, china's projection that chinese housing prices are expected to stabilize around 2026 provides an important reference for home buyers, businesses and policymakers. However, housing price trends are influenced by a number of factors, including policy, economy, market supply and demand. Therefore, all parties should closely follow market changes and policy developments and develop sound coping strategies and plans。
