?? Key Insights from Capital Economics
1?? Homebuilding Activity Continues to Contract
New home starts by developers have plunged over 70% since China’s Three Red Lines policy (2020).
Ongoing construction has declined by 20%, showing a lag between project initiation and completion.
Developers’ financial struggles have further delayed project timelines.
? While government policies aim to stabilize the market, the overall trajectory remains downward due to weakened demand and structural challenges.
2?? Limited Recovery Expected Despite Policy Support
New home starts may recover later this decade, but demographic shifts and slower urbanization will cap growth potential.
Capital Economics’ adjusted property investment measure shows a slowing decline, indicating some stabilization.
? Investors tracking China’s real estate sector can analyze financial growth metrics using the Financial Growth API for insights into developer performance.
3?? Government Measures Offer Temporary Relief
Real estate financing coordination scheme and special bonds have improved access to funding for developers.
Developers are accelerating work on existing projects rather than launching new ones.
? Policy efforts are preventing a sharper downturn but are not enough to drive a sustained recovery in homebuilding.
? Investment Takeaways
? Short-term stabilization does not signal a full recovery.? Demographic and economic headwinds limit future growth.? Policy support provides relief but won’t fully offset structural declines.
China’s real estate sector remains under pressure, making caution essential for investors considering exposure to homebuilders or construction-related industries.
