Ten investment banks and securities firms such as Goldman Sachs, Morgan Stanley and UBS… all predict that China's housing construction market will continue its gloomy trend in 2024.
The report stressed that if the forecasts of the investment banks and securities companies are correct, China's housing construction growth will shrink for three consecutive years, the longest consecutive period of decline. China's key real estate investment index fell 8% in the first 11 months of this year compared to the same period last year. The index fell 8.4% last year. The less optimistic outlook shows that although the Chinese government has introduced a series of measures to revive home buying demand, the downward trend of the real estate market has not ended.
The forecasts by Goldman Sachs economists are among the most pessimistic, predicting a double-digit contraction in China’s real estate fixed-asset investment in 2024, while emphasizing that the prolonged sluggishness of the real estate market will reduce China’s real GDP growth by 1%.
The continued weakness in China’s property market means the sector’s role as a driver of demand for goods and services is waning. Bloomberg Economics estimates that property-related demand now accounts for about 20% of China’s GDP, down from 24% in 2018.
According to economists at CITIC Securities, the main reason for the pessimistic view is the sharp decline in new real estate projects starting in 2023. This means that the number of completed projects will decrease. Another reason is that the decline in real estate sales has weakened the motivation of developers to start construction.
The slowdown in China’s property market will have a wider impact. Due to the industry’s large size, the slowdown in construction activity has been a major contributor to weak domestic demand, leading to deflation in China this year.
MINH CHAU
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