China's new home prices will likely show no growth this year, according to a Reuters poll, highlighting the intense pressure in the crisis-hit property sector that has put a choke-hold on the economy and left policymakers in a scramble to restore confidence.
The expected 0% year-on-year growth in home prices compared with a 1.4% gain tipped in the previous forecast in May, a Reuters poll of 12 economists conducted from Aug. 16-25 showed.
Confidence in the real estate sector, which accounts for a quarter of China's economy, suffered last year after many homebuyers threatened to stop repaying mortgages because developers couldn't build pre-sold housing projects due to strapped liquidity and strict COVID-19 restrictions.
"The slowdown of China's economic recovery and conservative consumption by residents shows that property market participants' confidence has not yet recovered, said Wang Xingping, senior analyst at Fitch Bohua.
Authorities have introduced several measures over the past year to prop up the sector, including smaller down payments, allowing bigger mortgages and cuts in mortgage rates. However, confidence remains low, partly due to persistent liquidity problems among property developers as well as a broader slowdown in the economy.
Property investment this year is expected to fall 7.7% year-on-year, much faster than the 4.2% drop forecast in the May poll, while home sales measured by floor area is expected to decline 5.0% in annual terms in 2023 from a gain of 2.7% in the previous poll.
China observers are sceptical that the property sector could turn a corner in the near term despite Beijing's support measures. Seven of 12 economists see an improvement in purchasing affordability for first time homebuyers over the coming year.
