China’s real estate market has yet to bottom out despite the turmoil of the past year, according to a report. Standard Chartered CEO Bill Winters.
Winters told CNBC’s JP Ong that China’s investment environment is “challenging,” with consumer confidence and international investor confidence relatively low.
“We know that the real estate market is at the root of a lot of the questions around confidence, but the real estate market hasn’t fully bottomed out yet and is slowly declining,” he added.
“We’re seeing occasional signs of increased activity, but at the same time, it doesn’t feel like we’ve found a true bottom in terms of price,” Winters said.
He said the risk was that property market bubbles that have burst in other markets are usually a precursor to a financial crisis, which is usually accompanied by a bigger fall in GDP.
China posted growth of 4.7% year-on-year in the second quarter, down from 5.3% in the first quarter and the slowest since the first quarter of 2023.
Last week, Bank of America lowered its forecast for China’s GDP growth in 2024 to 4.8% from 5%, and also cut its forecast for 2025 and 2026 to 4.5% from 4.7%.
The Chinese government has taken various measures to stimulate the economy, including slashing lending rates and, more recently, allowing home buyers to refinance their mortgages to free up money for spending.
Winters explained that the reason China hasn’t implemented a large-scale stimulus package is because it saw other countries take actions during the first wave of the coronavirus pandemic, which led to a rapid rise in debt in their economies.
“I think we’re continuing to have these smaller stimulus packages, monetary policy packages, fiscal policy packages to make sure we don’t get into a really negative spiral that would make it harder to recover. I expect the stimulus packages to be sufficient but not excessive,” he said.
So, while it will be a bit of an inconvenience in the short term, he believes that financially, “it will be a good thing.”
Meanwhile, Hao Hong, partner and chief economist at GROW Investment Group, told CNBC’s “Street Signs Asia” that there are no signs of strong policy stimulus so far.
While he said he could “only speculate” about why Beijing hasn’t implemented any major stimulus measures, he believes China is refraining from any major policy stimulus because it faces structural and cyclical downward price pressures in the property sector.
