China’s Housing Market Heading for ‘Year of Recession’, Says CICC

(Bloomberg) -- Bearish calls for China’s housing market, a key driver of the world’s second-largest economy, are multiplying as the government maintains home-purchase restrictions.

In recent forecasts for next year:

  • China International Capital Corp. said new home sales could slide 10 percent
  • S&P Global Ratings said prices may fall by as much as 5 percent
  • CGS-CIMB Securities Ltd. predicted a 10 percent decline in prices and sales volumes

CICC calls 2019 the “year of recession” for real estate, with sales to fall for the first time in five years. S&P said some developers could be dragged down in a sliding sector, calling their financing landscape “the most unfavorable in years.”

The next data for 70 major cities will come on Thursday, after the government last month reported the first slowdown in property-price inflation in seven months. Officials are grappling with keeping housing affordable and reining in prices without imposing an excessive drag on the economy.

“Home prices are seeing downward pressure in some cities, especially in tier-3/4 cities and suburban areas in tier-1/2 cities,” CICC analysts wrote. “More and more potential home buyers adopted a wait-and-see attitude.”

China’s property market was dubbed the most important sector in the universe back in 2011 by a UBS Group AG economist because of its importance to China’s growth and thereby to global expansion.

©2018 Bloomberg L.P.