China’s residential woes: Despite stimulus measures, oversupply problems are creating a sluggish recovery for China’s residential sector
What is going on with China’s housing market? Sales volumes, prices and new development all declined in 2014, despite the lifting or relaxation of home purchase restrictions almost everywhere except the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen. In addition, an interest rate cut this past November was designed to help stimulate sales.
In December 2014 and January of this year, sales volumes started to increase, but prices generally did not. The main culprit appears to be excess supply in almost all markets. The underlying growth in demand has not kept up with the pace of new construction the past few years, and the market now is feeling those effects.
A year ago the word on most people’s lips was “bubble”, but no national residential real estate bubble emerged. However, some cities do have oversupply issues, according to Joseph Huang, executive director and China country head for