China’s multiyear property crisis is set to drag on next year as prices and sales remain weak despite the government’s stimulus push to spur demand, according to Fitch Ratings.
China’s new home prices will fall by another 5 percent next year, as measured by China’s official statistics bureau, or roughly at the same pace this year, said Wang Ying (王穎), managing director at Fitch in Shanghai. Wang expects new-home sales to decline another 10 percent by area.
“The turning point for real estate sector hasn’t come yet,” Wang said. “Whether the recent warm-up can continue faces huge uncertainty.”
Photo: Adek Berry, AFP
China in the past two months unleashed its strongest package of policies to boost the property market, including cutting borrowing costs on existing mortgages, relaxing buying curbs in big cities and lowering taxes on home purchases.
The trading hub of Guangzhou became the first tier-1 city to remove all restrictions on buying residential property. Beijing, Shanghai and Shenzhen allowed more people to purchase residences in suburban areas, while letting others buy more homes.
The measures helped ease declines in China’s home prices for a second month last month. But the recovery in sales has been mostly limited to top-tier cities, and hasn’t spilled over to smaller cities, Wang said. What’s worse, prices in existing home markets have continued to decline and listings have kept piling up, suggesting the closely-watched segment in mega cities hasn’t reached its bottom, Wang added.
That will put further pressure on Chinese banks, which have been battling record low margins, sinking profits and rising bad debt from corporate borrowers. Net interest margins at Chinese banks shrank to 1.5 percent in the third quarter, the lowest in Asia Pacific, and could narrow again next year, said Vivian Xue (薛慧如), Fitch director on financial institutions.
Bad loan ratios from residential mortgages edged up by 10 to 20 basis points in recent quarters as expectations of weak income and slow delivery of finished homes damp buyers’ willingness on mortgage repayments, Xue said.
China is also facing economic headwinds as Donald Trump moves into office next year. Investors expect Beijing to roll out more stimulus policies to offset damages brought on by any additional tariffs. The country’s growth could fall by as much as two percentage points should Trump follow through on his plan to raise import taxes to 60 percent for Chinese goods, economists at Standard Chartered PLC and Macquarie Group Ltd have said.
This month, China unveiled a 10 trillion yuan (US$1.38 trillion) program to help resolve its local government debt crisis. But Davis Sun (孫浩), a senior director at Fitch, is taking a “cautious view” on how effective the package will be, adding that some local government financing vehicles might label themselves differently to circumvent restrictions from taking on more hidden debt.
JITTERS: Nexperia has a 20 percent market share for chips powering simpler features such as window controls, and changing supply chains could take years European carmakers are looking into ways to scratch components made with parts from China, spooked by deepening geopolitical spats playing out through chipmaker Nexperia BV and Beijing’s export controls on rare earths. To protect operations from trade ructions, several automakers are pushing major suppliers to find permanent alternatives to Chinese semiconductors, people familiar with the matter said. The industry is considering broader changes to its supply chain to adapt to shifting geopolitics, Europe’s main suppliers lobby CLEPA head Matthias Zink said. “We had some indications already — questions like: ‘How can you supply me without this dependency on China?’” Zink, who also
At least US$50 million for the freedom of an Emirati sheikh: That is the king’s ransom paid two weeks ago to militants linked to al-Qaeda who are pushing to topple the Malian government and impose Islamic law. Alongside a crippling fuel blockade, the Group for the Support of Islam and Muslims (JNIM) has made kidnapping wealthy foreigners for a ransom a pillar of its strategy of “economic jihad.” Its goal: Oust the junta, which has struggled to contain Mali’s decade-long insurgency since taking power following back-to-back coups in 2020 and 2021, by scaring away investors and paralyzing the west African country’s economy.
BUST FEARS: While a KMT legislator asked if an AI bubble could affect Taiwan, the DGBAS minister said the sector appears on track to continue growing The local property market has cooled down moderately following a series of credit control measures designed to contain speculation, the central bank said yesterday, while remaining tight-lipped about potential rule relaxations. Lawmakers in a meeting of the legislature’s Finance Committee voiced concerns to central bank officials that the credit control measures have adversely affected the government’s tax income and small and medium-sized property developers, with limited positive effects. Housing prices have been climbing since 2016, even when the central bank imposed its first set of control measures in 2020, Chinese Nationalist Party (KMT) Legislator Lo Ting-wei (羅廷瑋) said. “Since the second half of
AI BOOST: Next year, the cloud and networking product business is expected to remain a key revenue pillar for the company, Hon Hai chairman Young Liu said Manufacturing giant Hon Hai Precision Industry Co (鴻海精密) yesterday posted its best third-quarter profit in the company’s history, backed by strong demand for artificial intelligence (AI) servers. Net profit expanded 17 percent annually to NT$57.67 billion (US$1.86 billion) from NT$44.36 billion, the company said. On a quarterly basis, net profit soared 30 percent from NT$44.36 billion, it said. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said earnings per share expanded to NT$4.15 from NT$3.55 a year earlier and NT$3.19 in the second quarter. Gross margin improved to 6.35 percent,
RSS