China's deeply troubled property sector is set to see home sales fall for the second straight year in 2023, but the pace of declines will ease thanks to state support measures and the lifting of the government's strict anti-COVID policies.
Property sales are expected to slip by a median of 8% this year, a Reuters survey of eight economists and analysts showed, compared to a slump of around 25% in 2022, as economic activity, household income and consumer confidence are seen rebounding in the second half.
Hopes of a pickup in the economy later this year have been fuelled by China's dismantling in December of its stringent zero-COVID policy, which likely dragged GDP growth down to just 3% last year, one of its worst years in almost half a century. "For 2023, we expect a sequential rebound in both sales and property new starts, as property policies continue to ease, and re-opening after COVID leads to a rebound in economic activity and household income," said UBS chief China economist Tao Wang.
"In terms of what the market needs to see, I think that really goes back to the point on the demand side." "We may be close to see some bottoming out in housing demand …but I don't think we're quite there yet," he said. For many private developers, being absent from the land market last year also means they may have fewer projects for sale in 2023, in turn constraining their cash flow.
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