JPMorgan Econ FI-China The future of the housing market-107965996

HaibinZhu(852)2800-7039TingtingGe(852)2800-0143AsiaPacificEconomicResearchJPMORGANhaibin.zhu@jpmorgan.comtingting.ge@jpmorgan.com02May2024JPMorganChaseBank,N.A.,HongKongBranchJPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002JiYan(852)2800-7673grace.h.ng@jpmorgan.comji.yan@jpmorgan.comJPMorganChaseBank,N.A.,HongKongBranchJPMorganChaseBank,N.A.,HongKongBranchChina:ThefutureoftheFigure2:China'shousepriceIndex,3Q21=100housingmarket110Newhomeprice•China’shousingmarketcorrectionisnotoveryet...•…basedonbothaninternationalcomparisonandthe100SecondaryhomepricecurrentmarketsituationBIShouseprice•Thesolutionliesinpublicandrentalhousing90•Keymeasures:institutionalizedfundingsupportinthe80nearterm,rurallandreforminthelongrun70Since2021,China’shousingmarkethasexperiencedthemostseveredownturnsincethereformsallowedthedevelop-60mentoftheprivatehousingmarket(knownascommodityhousing)inthelate1990s(Figure1).Asof1Q24,newhome131415161718192021222324salesfellby46%(invalueterms)or48%(infloorspace)Source:BIS,NBS,J.P.Morganfromthepeakin2021.Newhomestarts(infloorspace)fellby60%,andtheshareofrealestateinvestmentas%ofGDPFigure3:Nominalhomepricefellfrom14.0%in2020to8.4%in1Q24.ThecollapseinChina(3Q21)Japan(1Q91)housingmarketactivitynotonlydragsoneconomicgrowth,Index,T=100HK(3Q97)butalsoincreasesfinancialvulnerabilitiesrelat...