China's real-estate market likely to be stable in 2023

Though China's economy is likely to see a recovery in 2023, the real estate market may continue to struggle this year, as the market is still dominated by 'rigid' housing demand rather than improving housing demand, Zhang Huadong, a chief analyst of EH Consulting told delegates at Mysteel's annual conference in Shanghai on December 30.

Rigid demand refers to people buying houses to live in, rather than for investment purposes, Mysteel Global noted. This means "the demand in the property market will be relatively flat and will not experience explosive growth in 2023," Zhang explained.

The rigid housing demand determines the pace of commercial transactions in new housing, Mysteel Global noted. During in 2022, commercial sales of new houses was seen decreasing to 1.4 billion square meters, according to Zhang, which contrasts with the average during the five years prior to 2022 where commercial sales of new housing exceeded 1.7 billion square meters annually, he told delegates.

"Commercial sales of 1.4 billion sq m will probably prove a historical low, and sales are likely to hover at this level in the next three-to-five years, as new housing sales may face pressure from the weakening appetite (for purchasing) among from buyers in tier-three cities and below," Zhang predicted.

In the meantime, "China's total area of newly-launched property projects may decline 5-10% in 2023," Zhang said, adding that in 2022, funding in China's property sector totaled an estimated Yuan 14 trillion ($2 trillion), representing the first on-year decline since 2000.

"The on-year decline is likely to continue in 2023, with funding shrinking by another 5% from 2022 to Yuan 13.3 billion this year," Zhang pointed out.

Written by Lindsey Liu, liulingxian@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.