BEIJING: A plunge in China's new housing construction is fuelling hopes the battered property sector is finally coming to terms with chronic oversupply, but a clean-up of bad assets is the missing policy piece that keeps Japan-like stagnation fears alive.
A man looks at the construction site of residential units, in Hong Kong, China , on Feb 27, 2024. BEIJING: A plunge in China 's new housing construction is fuelling hopes the battered property sector is finally coming to terms with chronic oversupply, but a clean-up of bad assets is the missing policy piece that keeps Japan-like stagnation fears alive.
New home starts in China fell 63 per cent from their peak to 634 million square metres in the 12 months through April. George Magnus, research associate at Oxford University's China Centre, says that could come in 2025 or even sooner. Wright estimates the industry as a whole, which used to represent about a quarter of China's economic activity, will stabilise at 40-50 per cent of its peak levels and never return as a driver of growth.New home prices in China have fallen 11 per cent, according to official data. JPMorgan estimates prices for older apartments dropped by a similar amount.
A stock of unsold homes estimated at almost twice the size of London still exists on the balance sheets of cash-strapped Chinese developers, whose debts sit on the books of banks and other institutions.
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