China’s housing stock correction could take more than a decade: The Economist

“And if you look at properties under construction, 6 million square meters are under construction. At this rate, it will probably take more than 10 years to clear all the housing that is under construction. So, overall, we are They say it will take several years.”

Since the Chinese government launched a widespread deleveraging of its once bloated real estate sector in 2020, which directly and indirectly accounts for about a third of China’s real estate sector, real estate developers have spiraled into debt. Due to the crisis, home sales growth and home prices have remained sluggish. economic activity.

The measure, known as China’s “three red lines” policy, requires developers to limit debt according to the company’s cash flow, assets and capital levels. Real estate giants Evergrande and Country Garden have emerged as two of the most high-profile victims of mainland real estate developers.

“At this point, people have to get used to the idea that it’s probably going to take a lot longer to clear out all the inventory. At the same time, we’re going to have to get used to the idea that it’s probably going to take a lot longer to clear out all the inventory. At the same time, we’re going to have to get used to the idea that it’s going to take a lot longer to clear out all the inventory. At the same time, we’re going to have to get used to the idea that it’s going to take a lot longer for the economy to move forward, rather than just relying on it. We have to find new growth spots.”We are only targeting the real estate sector and real estate investment for economic growth,” Hong said.

Several market experts spoke. We did not expect the asset correction to last this long.

In previous economic downturns, the real estate sector would have responded quickly to stimulus and recovered two-quarters or three-thirds of the time after hitting bottom, he added.

“This time, it looks like the real estate sector has peaked and the long-term cycle is going down. As a result, the market is not ready for a long-term correction, so the market is used to quick rebounds. ”Based on past experience, the market is caught off guard,” Hong said.

“As a result, this lack of preparedness has undermined confidence and market response.”

Despite a series of support measures, the prolonged real estate crisis affected consumer confidence and weighed on the broader economy.

This has led to growing calls for more aggressive stimulus measures amid concerns that the world’s second-largest economic slowdown is worsening.

In December, Chinese leaders at the Central Economic Work Conference pledged to diversify risks related to the real estate sector, local debt and small and medium-sized financial institutions, and signaled a strategy to build affordable housing.

At the same meeting, leaders also emphasized that focusing on quality development is key. They set out a nine-point plan that included technological innovation in industrial systems, increased domestic consumption, high levels of foreign investment, and revitalization of agriculture to strengthen food security.

China’s central bank expands lending by 350 billion yuan ($49 billion) Lending to policy banks through the additional lending facility promised in December increased, the People’s Bank of China said in a statement on Tuesday.

This is the first monthly increase since November 2022, when the Chinese government used the tool to stimulate the economy during the coronavirus pandemic and as the central bank looks to boost growth. Expectations were high that the deal would support infrastructure construction and the struggling housing sector.