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China’s housing market seen in structural stagnation for years
Commerzbank says real estate investment has fallen to 53% of its July 2021 peak and housing starts are down to 24% of former levels, keeping the sector as an economic drag.
Commerzbank analyst Dr. Henry Hao says China’s housing market will remain in structural stagnation about five years after the Evergrande crisis, with national prices still described as following an L-shaped pattern.
In the view cited by FXStreet, a “K-shaped” divergence is emerging between Tier-1 cities and lower-tier areas, while weak demand, tighter funding conditions, and demographics prevent a broad-based rebound.
The analysis argues real estate is no longer positioned to be China’s primary growth engine, citing that real estate investment is at 53% of its July 2021 peak and housing starts have fallen to 24% of prior levels, even as housing completions are described as relatively resilient at 55% due to policy support.
FXStreet also notes that Beijing is seen as aiming to manage the decline rather than spark a major rebound, including measures such as lower mortgage rates, reduced down payments, and local government efforts to buy unsold homes, while capital is redirected toward sectors like green technology, electric vehicles, and advanced industrial equipment.