Chinese real estate market will continue to cool in H1 2022 with tight restrictions: Poll

BEIJING (REUTERS) – China’s real estate slowdown is expected to continue into the first half of next year, as house prices and sales decline as strict credit policies and an impending property tax dampen demand, according to a Reuters poll.

The real estate sector, a key growth engine for the world’s second-largest economy, has slowed sharply in recent months, with sentiment reeling from tight regulations and a growing liquidity crunch that has engulfed some of the biggest and most indebted developers. from the country.

Forecasts for house prices and real estate investment were darker than the last survey in August.

Average home prices are expected to fall 1% in the first half of next year, according to 14 analysts and economists polled by Reuters from Nov. 26 to Dec. 1.

For this year, home prices are now expected to rise 2.6%, down from a forecast of 3.5% in the last survey and after rising about 4.9% last year.

“The downward trend in house prices has emerged” amid tight quotas on mortgage lending, concerns about a property tax and weak demand, said Chen Shen, analyst at Huatai Securities.

On the demand side, real estate sales by floor space are expected to fall 16% in the first half of next year, compared to an increase of 27.7% in the same period this year.

Expectations on the supply side are also gloomy, with real estate investment expected to fall 3% in the first six months of next year, compared to a 15% increase in the first half of this year.

The rapid deterioration of conditions in the real estate sector has sparked speculation that policymakers could start to ease tight restrictions on buyers and developers and even cut interest rates if economic growth weakens too sharply.

But most Chinese observers expect authorities to stick largely to the restrictions for now, even as they fine-tune regulations, including a marginal easing of credit policies.

China Merchants Securities economist Zhao Ke said, “Cities will ease restrictions on buying, selling, lending and restrictions on lowering selling prices based on local conditions.

Policymakers have recently made some adjustments to help genuine home buyers and some local authorities have taken steps to ease the financial crisis for developers.

Chengdu, in southwest China, issued a notice last week to ensure developers receive funds from pre-sold properties and new loans.

Penny D. Jackson