Chinese Real Estate Market Could Tap a Bottom by Second Quarter: Lian Ping

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Leading Chinese economist Lian Ping (连平) says that China’s real estate market could tap a bottom by the second quarter of the year, as the central government pushes for the property sector to pick up the slack created by other lagging areas.

“In 2023, the slowdown in external demand and fiscal pressure may restrict the manufacturing and infrastructure investment capabilities, and the expectation of improvements to real estate investment will become more urgent,” Lian said in an interview with National Business Daily.

“It should be noted that housing support policy has been significantly strengthened over the past few years. Based on the guidelines proposed by the Central Economic Work Conference and related ministries and commissions at the end of 2022, the key theme for policy in 2023 will be to ‘support housing demand, meet the rational financing needs of the industry, promote the prevention and resolution of risks in high-quality leading real estate enterprises, and improve the balance sheets of leading real estate enterprises.'”

Lian said that the current real estate downturn has already exceeded the average length for slumps in the sector since the start of the new century, which bodes well for a recovery in the near-term.

“Our statistical analysis indicates that this is the seventh real estate downturn since 2001 and that the downturn period has exceeded the historical average – it has been one and a half years from the third quarter of 2021 to the end of 2022, and could extend into the first quarter of 2023.

“The current situation is similar to the situation from the second half of 2010 to the third quarter of 2012. Considering that the current round of policy adjustments is quite timely, it is expected that the length of this downward cycle may be shorter than the 27 month-long downturn that started in the second half of 2010…it could bottom out in the second quarter of 2023 and gradually recover in the second half of the year.”