From Asian property mavens, Mingtiandi, January 23:
Second-hand home sales jumped in first- and second-tier cities during the fourth quarter of 2024
China’s property sector may have reached a bottom, according to S&P Global Ratings, which expects surging sales of used homes to help stabilise the market towards the second half of 2025.
Sales activity in the secondary housing market jumped in first- and second-tier cities during the fourth quarter of 2024 after the government enacted property stimulus measures in September, the rating agency said in a report released Wednesday. The moves included cutting interest rates on existing mortgages and easing down-payment requirements for second homes.
In Beijing, more than 20,000 second-hand homes changed hands in December, the highest such volume in more than 20 months. The uptick in China’s second-largest housing market signals that appetite for homes remains sound and that government policies are resulting in a sequenced recovery, S&P said, with richer, upper-tier cities turning around first and eventually boosting confidence and demand in more peripheral regions.
“While growth is skewing toward the secondary market, which is of little help to developers, we believe the gains are a harbinger of improving sentiment,” said credit analyst Esther Liu. “This should eventually translate into rising primary sales and better credit metrics for our rated entities.”
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The first sentence fragment of that that last paragraph is a point we have been trying to hammer home for our readers for going on three years. Here's an outro from June of last year:
One of the oddest failures of analysis of the past two years is the apparent belief that Chinese central bank and government stimulus would do anything for future construction and thus demand for the inputs that go into construction.
They have their hands full just trying to mitigate a multi-trillion USD black hole of real estate that sucks up any money that comes near it.
Regarding bottles of cash in played-out coal mines, China already builds bridges that fall down, a type of uber-Keynesian stimulus, which, as M. Bastiat pointed out, is great for nominal GDP, not so much for actually building national wealth.Related:
July 10, 2023: "China May Face A Dreaded 'Balance Sheet Recession'":
Of course it is, this is the classic central bank "pushing on a string" scenario....Which was re-iterating June 18's "Goldman Sachs cuts China GDP forecast for 2023":
That 'the country’s ongoing stimulus was incapable of generating a strong “growth impulse,"' line is what we were trying to communicate last week. From June 14's "What's that Got To Do With The Price Of Pork In China?"....
However—SCMP, 23 Jan 2025:
China Property Slump Not Over Yet: Fitch
China’s property market downturn is likely to persist this year with slower home sales and construction activity, hobbled by “structural challenges” including oversupply and lower affordability, according to Fitch Ratings.
The value of new home sales is expected to fall 15 percent to RMB 7.3 trillion ($1 trillion), reflecting a 5 percent decline in the average selling price and a 10 percent drop in gross floor area, the rating company said Wednesday. Read more>>
So you tell me. And stay out of newbuilds for a while longer.
