\ud83c\udfd7\ufe0f Key Insights from Capital Economics
1️⃣ 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.
\ud83d\udd39 While government policies aim to stabilize the market, the overall trajectory remains downward due to weakened demand and structural challenges.
2️⃣ 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.
\ud83d\udcca Investors tracking China’s real estate sector can analyze financial growth metrics using the Financial Growth API for insights into developer performance.
3️⃣ 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.
\ud83d\udd39 Policy efforts are preventing a sharper downturn but are not enough to drive a sustained recovery in homebuilding.
\ud83d\udccc Investment Takeaways
\u2705 Short-term stabilization does not signal a full recovery.
\u2705 Demographic and economic headwinds limit future growth.
\u2705 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.
