China’s property prices to rise in 2023, sales to fall more slowly

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BEIJING — China’s property sector will remain weak but will see a gradual recovery in 2023, economists said in a Reuters poll, expecting further stimulus measures and looser COVID-19 curbs to support the crisis-stricken sector next year.

New home prices are expected to fall in the first half of next year before rising for the whole of 2023 while sales are seen falling more slowly as the year progresses, according to the 16 analysts and economists polled by Reuters between Nov. 9 to 17.

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According to the survey, new home prices are seen falling 0.5% in the first half of 2023, down from a 2.0% growth forecast for that period in a September survey. But prices were expected to rise 1.8% for the full year.

“For 2023, property indexes are expected to see a turning point and consumer confidence will improve with the economy completely stabilized after COVID restrictions ease,” said Li Zongguang, chief economist at China Renaissance Holdings Limited.

“Property measures are expected to strengthen support, which will improve residents’ confidence.”

Woes in China’s real estate market, which accounts for about a quarter of its $17 trillion economy, deepened in October, weighed down by COVID-19 curbs and industry-wide problems. New home prices fell at their fastest pace in over seven years in October and sales slumped for the 15th straight month.

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A recent slew of support measures, including loan repayment extensions, aimed at improving liquidity in the property sector has underpinned market sentiment.

But analysts and economists in the poll expected concerns about falling house prices, protracted COVID restrictions, and delays in construction to continue to weigh on demand.

Property sales were seen slumping 5.0% in the first half of 2023, a smaller drop than the 15.0% fall forecast in the September poll. Economists expected a 1.0% slump in sales for the whole of 2023, the survey showed.

Huang Yu, vice president of China Index Academy, expected the market to gradually stabilize as the financing measures boosted confidence, but she did not expect a V-shaped rebound, stressing the need for more policies targeting demand.

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“More home purchase support policy is needed,” especially a move to ease some home purchase curbs in major cities, Huang added.

Demand for property took a big hit this past year as many developers lurched from crisis to crisis and halted the construction of apartments as they ran out of money.

Beijing last week eased some of its COVID curbs with officials flagging further fine-tuning of restrictions, raising hopes of a complete reopening after annul parliamentary meetings in the spring of 2023.

Some analysts say average house prices will need to fall by around 20% to 30% to entice demand.

(For other stories from the Reuters quarterly housing market polls:) (Reporting by Liangping Gao, Shuyan Wang and Ryan Woo; Editing by Ana Nicolaci da Costa)