Realty recovery forecast on optimized policies

Positive signals

The tone-setting Central Economic Work Conference held in December has also sent out positive signals that further measures will be introduced along with the existing supportive measures to stabilize the sector, he added.

During the conference, existing risks and difficulties in the real estate industry were mentioned, and relevant support policies may be introduced in 2024.

Meanwhile, clear requirements for the future development of the real estate industry have been put forward, guiding the industry to accelerate toward a new development path in the mid- to long-term.

The conference called for proactive and prudent efforts to defuse risks in the property sector, equal treatment toward reasonable financing needs of real estate enterprises regardless of ownership, treating equally different kinds of ownership, and the accelerated building of a new development model for the industry.

Based on the existing status of the realty market, measures introduced by central and local governments, as well as the intent of the Central Economic Work Conference, Pang said he expects the real estate market to stabilize in 2024.

With the formation of a virtuous cycle of finance and real estate and the establishment of a new property development pattern, the property market can show stable and healthy development, he added.

"We think the government will continue to implement measures to stabilize the property market, improve expectations, support homebuyers' demand for housing and home improvement, boost social housing and meet the reasonable financing needs of property developers," Pang said.

The property sector remains a pillar industry of the Chinese economy.

The policy stance has shifted to supporting the property sector as a stabilizer and growth driver of the Chinese economy, preventing it from becoming a drag on the economy.

Policies could be further eased until the physical market shows signs of stabilization and recovery, and industry leaders with solid fundamentals sail through the tough times, Pang added.

Brodie said he expects support for the residential market to be strengthened in 2024 and more policy concessions and safeguards used to promote the healthy development of the residential market.

"It is expected that the house purchase policies within first-tier cities and second-tier hotspot cities will continue to be adjusted and optimized. It is also expected that the construction and development of affordable housing will be further accelerated. In addition, the long-term rental housing market and real estate investment trusts will continue to develop," said Brodie.

"In our view, China's real estate market has transitioned from a phase where supply falls short of demand to a new stage featuring more balanced supply and demand dynamics," S&P said in its report.

Despite its prominent position in China's economy, the real estate sector is set to witness the end of a boom period and enter a new era of high-quality and healthy growth, as the market landscape has undergone fundamental changes, it said.

"In the medium and long run, we expect to see a new balance point between real estate sector's supply and demand that fits the current market scale. The nationwide new residential house sales are unlikely to hit (the 2021 level of) 18 trillion yuan ($2.54 trillion) again. In our view, the new balancing point will be driven by two factors — the central government's top-level policy guidance addressing housing issues, and the actual homebuying demand," according to the report.

Riding on the spirit of the Central Economic Work Conference, a national housing and urban-rural construction meeting was held on Dec 21 and 22 in Beijing, which outlined key tasks for 2024.

The meeting promoted the high-quality development of urban and rural construction to a new level, said Chen of the China Index Academy.

Chen also said the meeting further clarified the direction of real estate policy in 2024, stressing that it is necessary to make efforts to build quality homes and that an increased supply of quality houses will drive demand for better living conditions in the future.

"After more than two years of market adjustments, quite a few favorable elements have emerged in the market, which will join forces with existing measures to realize the stabilization of the property market in 2024," Chen said.