China’s real estate and stock markets are both cause for concern. This year, Chinese Premier Li Keqiang, in his government work report during the National People’s Congress, for the first time included “stabilizing the real estate market” in the overall requirements of the report, emphasizing the need to stabilize the real estate and stock markets, and prevent and address risks in key areas and external impacts. However, the question remains whether stability can indeed be achieved.
Chen Changsheng, a member of the drafting team of Li Keqiang’s government work report and Deputy Director of the State Council Research Office, stated that the report emphasizes macro-control, asset prices, and includes stabilizing the real estate and stock markets in the overall requirements, possibly for the first time. There is a call for greater efforts to stabilize the real estate and stock markets. The real estate and stock markets serve as important indicators for the overall economic performance, especially as real estate represents a major part of people’s assets. The goal for 2025 remains to “continue to push for the stabilization of the real estate market.”
mainland bloggers have noted that both the Chinese real estate and stock markets are currently sluggish, with the real estate market in particular experiencing significant declines, leading to a continuous erosion of household assets and a lack of confidence in the future among the people, subsequently impacting their willingness to consume and resulting in an economic slowdown.
At the end of last year, several credit rating agencies expressed pessimism about the Chinese property market. Goldman Sachs, a Wall Street investment bank, stated that Chinese property prices could fall by another 20% to 25%. This is mainly due to the acceleration of urbanization, the gradual disappearance of the demographic dividend, the increasing supply-demand imbalance in the real estate market, and the continuous government regulation of the real estate market which has weakened the momentum of rising prices.
Goldman Sachs also mentioned that the total debt of China’s real estate sector amounts to a staggering 59 trillion yuan. The interest burden on this debt alone reaches trillions of yuan annually, putting enormous financial pressure on developers. Even Evergrande, a real estate company supported by mainland state funds, reported a colossal loss of 45 billion yuan in its financial statements.
Morgan Stanley also predicts that the Chinese real estate market will continue to slump in 2025, with property prices possibly dropping by around 9%. International rating agency S&P Global Ratings released a report forecasting that, with the implementation of intensive positive policies, the decline in China’s housing sales in 2025 will significantly narrow, with an expected decrease ranging between 5% to 10%.
During the recent National People’s Congress and the Chinese People’s Political Consultative Conference, the government report of the State Council for the first time included “stabilizing the real estate market” in the overall requirements of the report – does this mean a negation of Goldman Sachs’ bearish view? Taiwan’s Meihua News Network, under the Meihua Media Group, reported that this may not necessarily be the case.
The report mentioned that while the Chinese government has intervened to support the stock market multiple times, it had never openly declared the intention to “stabilize the real estate market”. However, the collapse of the real estate market over the past two years has severely threatened economic stability, forcing the government to take a stance.
According to the data released by the National Bureau of Statistics of China on February 19 regarding the “Price Changes of New Residential Buildings in 70 Large and Medium-sized Cities in January 2025”, the “New Residential Housing Price Index” in the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen showed differing trends: Shanghai recorded a year-on-year increase of 5.6%, while Beijing experienced a decrease of 5.7%, Guangzhou a decrease of 8.4%, and Shenzhen a decrease of 5.2%.
Further analysis of the inventory of the Chinese real estate market confirms that Goldman Sachs’ prediction is not exaggerated. As of the end of 2024, the new housing inventory in the Chinese real estate market had accumulated to a value of 93 trillion yuan, and even though the new residential housing sales in 2024 reached only 9.6 trillion yuan, the real estate industry…