China's property market shows signs of stabilization

Analysts from UBS announced on Wednesday that China's real estate market may be nearing stability after years of decline. John Lam, a UBS official, noted that there are some positive signs amid the ongoing struggles. However, he cautioned that these signals might vary by location and are not yet nationwide. Sales of existing homes in major cities have increased by over 30% compared to last year. UBS's new forecast suggests that home prices in China could stabilize by early 2026, earlier than they previously thought. They expect that secondary home sales could make up half of all transactions by then. The decline in China’s property market began in late 2020 due to government efforts to reduce developers' heavy debt reliance. This has led to decreased property sales and defaults by major developers like Evergrande. Despite past government measures, the slump continued until recent, stronger stimulus was introduced, fostering hope for recovery. Other analysts support the idea that the market may be bottoming out. Conditions like reduced unsold housing and a narrowing gap between mortgage and rental rates might prompt more buyers to enter the market. Investments from foreign companies also suggest growing interest in Chinese real estate. However, there are still challenges. Real estate investment fell by nearly 10% in the first two months of 2025. Economists warn that without a solid recovery in the property sector, the overall economy may struggle to improve. Increased sales of existing homes do not directly benefit property developers, who rely more on new home sales. Confidence among consumers is crucial for a full recovery. Experts agree that building this confidence will take time and effort. The situation remains delicate, and analysts emphasize that effective policy execution will be essential moving forward.