JPMorgan says that China’s battered real estate market may be approaching a turning point, which will help China's stock market outperform other emerging markets.
According to Bloomberg, Rajiv Batra, a strategist at the firm's Singapore office, noted that the recovery in Hong Kong’s real estate market is spreading to major cities in mainland China. At the same time, the lagged wealth effect from the rebound in China’s stock market is also stimulating housing demand.
Batra believes that, according to the average house price-to-income ratio, housing in mainland China has reached its most affordable level since 2016.
The price of new homes in China continued to decline in March, but the decline narrowed to its lowest level in nearly a year; first-tier cities even saw a month-on-month rebound.
On the 16th, China’s National Bureau of Statistics released data on sales price changes for commercial housing in 70 cities, excluding affordable housing. Based on this, foreign media calculated that new home prices in March fell by 0.2% month-on-month, narrowing from February’s 0.3% decline, marking the smallest drop in 11 months. Bloomberg noted that new home prices have seen the rate of decline shrink for the second consecutive month, indicating that the market downturn may be nearing its bottom.
Goldman Sachs earlier this month published a report indicating that in the next one to two years, more first- and second-tier cities are expected to see housing prices stabilize, with Shenzhen and Shanghai possibly leading the way. However, lower-tier cities still face challenges such as high inventory, population outflows, and weak fiscal foundations, making a rapid market recovery difficult.