China’s troubled property market will continue to weaken as a series of government stimulus and support measures fail to “satisfactorily” prop up the sector, JPMorgan economists say.
Zhu Haibin, chief China economist at JPMorgan Chase, told CNBC’s “Squawk Box Asia” on Monday that “the housing market collapse is not over yet,” adding that home prices will not stabilize until 2025 at the earliest.
this Average new home sales price According to data released by the Bureau of Statistics, housing prices in 100 cities in China increased slightly by 0.11% from July, further slowing down from the 0.13% growth in June. China Index Academy Saturday. The report showed that resale home prices fell 0.71% from the previous month.
As China’s real estate market is still in deep crisis, the average prices of new homes and resale homes fell by 1.76% and 6.89% respectively compared with the same period last year.
Bloomberg reported on Saturday that China was weighing Plan to lower borrowing costs for homeowners Allows refinancing of mortgages up to $5.4 trillion.
But analysts have expressed doubts about the effectiveness of the proposed measures in stimulating homebuyer sentiment and overall consumption.
“Some people think this will unleash consumption – that’s just one side of the story,” said Winnie Wu, chief China equity strategist at Bank of America Securities. She said lower mortgage rates would lead banks to lower deposit rates to protect profits and ensure the stability of the financial system, noting that lower deposit rates will ultimately reduce interest income on household savings.
JPMorgan’s Zhu said measures to refinance mortgages would also do little to stimulate demand for new homes.
He said that even if the mortgage refinancing policy is implemented, it is not a policy to revive the real estate market.
“Cutting interest rates is not the best policy, and squeezing bank profit margins will not go very far,” said BofA Securities’ Wu, adding that the government needs to “create a positive feedback loop rather than a downward spiral.”
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