China's Property Market Set for Gradual Decline, with Potential Stabilisation in Major Cities

Lian Ping, the chair of the China Chief Economists Forum, suggests that the downturn in China's property market might decelerate this year. Writing for China Real Estate Newspaper, Lian and his team of economists predict that metropolitan areas such as Shanghai and Hangzhou could spearhead the stabilization of new home prices before this trend spreads nationwide.

The team forecasts a modest 5 percent decrease in annual property sales as a result of price reductions and marketing incentives from developers, which is a significant improvement from the sharp drops seen at the end of the previous year.

In the resale market, economists anticipate a potential V-shaped recovery, with the steepest price declines expected in the second quarter. However, the annual decrease should be about 2 percent, showing an improvement of one to two percentage points compared to 2023.

The possibility of market recovery this year hinges on whether supportive policies can successfully alleviate developers' liquidity issues and whether there will be a resurgence in real estate investment. Expectations are set for real estate investment to fall by a slower 6 percent this year.

Meanwhile, developers have been accelerating sales through unique promotional efforts to entice buyers. In a notable instance, a development project in Guangzhou's Xintang area, located in the Zengcheng district, launched an offer requiring just a 12 yuan (approximately HK$13.20) down payment for some three-bedroom units still under construction, as reported by mainland media.

This aggressive sales tactic arrived on the heels of the fastest drop in new home prices in nine years, plummeting by 0.4 percent last month despite various policy initiatives aimed at stimulating the market.

Floor area-based property sales saw a 23 percent year-on-year decline last month.

In a separate announcement, China's financial authority declared its intention to bring all financial activities under stricter surveillance to mitigate systemic risks. The National Administration of Financial Regulation is actively working to manage local debt concerns and refine regulatory policies for the real estate sector, aiming for a more controlled and stable economic environment.

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