According to a recent survey, as China’s real estate investment and sales continue to decline, house prices in mainland China are expected to fall at a faster rate this year, posing a significant blow to the Chinese Communist Party’s efforts to revive the real estate industry.
A survey conducted by Reuters from May 10 to 17 showed that new house prices in 2024 are projected to decrease by 5.0%, compared to the previous forecast in February of a 0.9% decrease. It is now predicted that housing prices in 2025 might remain stable, contrasting with the earlier prediction of a 0.5% increase.
The survey also indicates that real estate sales in 2024 could shrink by 10.0%, exceeding the previous forecast of 5.0%, and investments are expected to drop by 10.0%, compared to the previous forecast of a 6.1% decline.
Last Friday, the Chinese Communist Party announced what it called the strongest measures to stimulate the real estate sector in recent years, including commitments to provide up to 1 trillion yuan (US$138 billion) in funds, easing mortgage regulations, and local governments buying “some” apartments.
At a time when the Chinese real estate market urgently needs stabilizing, the scale and intensity of this market “rescue” initiative far exceed past efforts.
However, former CCP official Du Wen expressed on platform X that the party’s policies are a “typical case of trying to solve a small crisis with a big crisis,” as China’s government debt is already the highest in the world and the public debt crisis is one of the three major crises alongside the real estate and financial crises.
Reuters also analyzed that there are still issues with the latest measures, particularly concerning overzealous implementation and how the government will help clean up the tens of trillions of yuan worth of housing inventory.
Since the real estate market crisis in 2021, the CCP has rolled out wave after wave of support policies to boost demand, but the results have been minimal.
Bloomberg reported on May 17 that following the bursting of the Chinese real estate bubble and the collapse of many real estate companies, related industry workers have been left in the lurch. In the three years leading up to 2023, apart from job losses in construction and marketing sectors, around 500,000 individuals were unemployed due to the real estate market collapse.