From Morningstar: 2024-10-08 10:18:00

The recent surge in Chinese real estate stocks was driven by eased policies and renewed investor optimism, not increased housing demand. Despite a temporary boost in home sales, prices are expected to remain weak due to oversupply. Experts predict stabilization by mid-2025 as excess inventory is absorbed.

While some companies like China Jinmao and Vanke may be overpriced, state-owned developers like China Overseas Land & Development and China Resources Land offer growth potential. Policy changes, including lower down payment ratios and lifted buying restrictions in top cities, have already boosted new home sales.

These policy changes, such as reduced down payment ratios and removal of buying restrictions, led to a 20% increase in new home sales in Tier 1 and Tier 2 cities during the national holiday in October 2024. However, sustained demand recovery is uncertain due to low home prices, especially in lower-tier cities.

Experts anticipate a moderation in China’s home inventory from 2025 onwards as local governments expedite the buying process and developers offer further discounts. This is expected to drive increased absorption of unsold units and clarify funding sources, ultimately reducing excess inventory in the market.



Read more at Morningstar: What We Think Of The Big Rally in China Real Estate…