China's real estate market unlikely to recover in 2024

Weak recovery, China's economy needs more "miracles" Chinese real estate: Effective "lessons" for Vietnam

Real estate revenue continues to decline sharply

According to CNN, China's National Bureau of Statistics (NBS) announced that the country's real estate sales in the first two months of this year only totaled 1.06 trillion yuan (equivalent to 147 billion USD), down 29.3% compared to the same period in 2023.

In the January-February period, real estate investment in China fell 9%, faster than the 5.7% decline recorded in the same period last year.

Thị trường bất động sản Trung Quốc khó phục hồi trong năm 2024

High-rise buildings in China's coastal city of Qingdao (Photo: CNN)

Commenting on the issue, analysts at Capital Economics said: “ The adjustment in the construction and real estate sectors is still in its early stages. We expect construction volumes in the real estate sector to halve in the coming years. This will significantly reduce economic growth in the medium term.”

Supportive policies are needed to maintain economic growth.

However, other sectors of the Chinese economy including consumption, industrial production and infrastructure investment have shown signs of improvement thanks to a spending boom during the holiday season, large exports and a state-led infrastructure push.

Retail sales in China rose 5.5% in January-February 2024 from a year earlier, above the 5.2% expected, according to a Reuters poll of analysts, with food services, telecommunications, tobacco, and sports and entertainment posting the highest revenue growth.

“Retail sales are on the rise, but it is not certain that this positive trend will last. It may be due to increased consumer spending related to the festival at the beginning of the year,” said Louise Loo, China economist at Oxford Economics.

In addition, industrial production in China also grew positively at 7% in the first two months of this year compared to the same period in 2023, surpassing the 5% growth forecast in a Reuters poll.

The purchasing managers' index (PMI) for China's export-oriented manufacturing firms rose to 50.9 in February from 50.8 in January, marking the fourth straight month of growth, market research firm S&P Global and Caixin said.

Rising export demand has boosted factory output, with China’s exports rising 7.1 percent in the January-February period from a year earlier, according to data from China’s customs.

Meanwhile, investment in fixed assets such as factories, roads and power grids rose 4.2 percent in the first two months of this year, beating analysts' estimates.

The increase was mainly driven by state-owned investment, according to NBS data analysis. However, the real estate downturn and weak domestic demand require more policy support to sustain growth.

“Without decisive stimulus to consumption in 2024, we believe it will be difficult to sustain spending growth,” Ms. Louise Loo added.

Zhiwei Zhang, chairman and chief economist at Pinpoint Asset Management, said: “The outlook for China’s economic growth in the second quarter of 2024 is uncertain. If exports partially offset the weak domestic momentum, a sustained recovery will require more policy support, especially from the fiscal side.”

Source