• A Reuters poll of economists points to zero price growth for new homes in China this year. 
• Confidence in the property sector has tanked over the last year as major developers struggle and the economy slows.
• The Chinese property market has been recently headlined by Evergrande’s crashing stock and Country Garden’s missed bond payments.

China’s economy hasn’t rebounded from the pandemic as expected, and economists’ outlook for the country’s property sector is particularly bleak.

In response to a Reuters poll conducted August 16-25, 12 economists said they don’t expect new home prices in China to show any growth this year.

The 0{1652eb1ffa4184925f6a63a9c04ea6b421acb7a78117241e7d4325cdca8339fa} forecasted annual growth is lower than the prior 1.4{1652eb1ffa4184925f6a63a9c04ea6b421acb7a78117241e7d4325cdca8339fa} gain reported in a poll in May.

The real estate sector has accounted for about 20{1652eb1ffa4184925f6a63a9c04ea6b421acb7a78117241e7d4325cdca8339fa} of China’s GDP over recent years, and a 2020 People’s Bank of China survey found that roughly 59{1652eb1ffa4184925f6a63a9c04ea6b421acb7a78117241e7d4325cdca8339fa} of household wealth was tied to property. 

“The boom that characterized the property sector of the last decade is over,” Alfredo Montufar-Helu, the head of the China Center at the Conference Board, told Insider in a recent interview.

Of the 12 economists, seven said they expect to see an improvement in purchasing affordability for first-time homebuyers over the next year.

Much of China’s broader economic issues stem from its real estate market, which this month has been headlined by Evergrande’s crashing stock price and billions of dollars in balance sheet losses, as well as Country Garden’s missed bond payments.

The hurdles have led some commentators to speculate about a potential “Lehman moment” for the country, though some economists say the political economy in China is too different to warrant a comparison to the US in 2008. 

Beijing has moved to prop up the real estate market in 2023, with methods including allowing for smaller down payments and slashing mortgage rates, though that hasn’t yet had a big impact on confidence in the sector.