China | Significant policy turnaround to ensure housing market soft-landing

Chinese authorities have made a significant real estate policy turnaround from the 2021 regulatory storm to 2022 stimulus to ensure a soft-landing on the housing market.

Key points

• Key points:
• The 2021 housing market regulatory reform has led to tumbling housing prices and real estate activities in 2022, which significantly dragged on growth.
• A slumping growth calls for a housing policy turnaround. Since the lift of Shanghai lockdown, the authorities have promulgated policies trying to support the tumbling housing market and to secure a soft-landing of the housing market.
• Among all these stimulus measures, the recently announced “16-Point Plan” is the sweeping rescue package to salvage the real estate market.
• After analyzing the linkages between the property market and the four key economic sectors-banking, government, enterprises and household, together with stress tests of housing price drop scenarios, we do not believe the housing market slowdown could lead to recession in 2023.
• Sentiment matters, which not only depends on housing stimulus but also on the end of "zero Covid". Thus, whether and how long the ongoing housing stimulus could bring the housing market out of quagmire is still questionable.

Authors

Geographies

Topics

Tags