{"id":3801,"date":"2025-07-21T09:51:38","date_gmt":"2025-07-21T09:51:38","guid":{"rendered":"https:\/\/bricksandmortarmgt.com\/?p=3801"},"modified":"2025-07-22T09:50:21","modified_gmt":"2025-07-22T09:50:21","slug":"china-has-home-price-bottomed-yet","status":"publish","type":"post","link":"https:\/\/bricksandmortarmgt.com\/zh_hk\/2025\/07\/china-has-home-price-bottomed-yet\/","title":{"rendered":"China – Has Home Price Bottomed Yet?"},"content":{"rendered":"
\n\t\t\t\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t
\n\t\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t

China has been on a long property cycle correction; although not the longest fall compared to the 97-03 cycle, it certainly feels like the deepest drop experienced – down 39% from the 2021 peak in Shenzhen for example:<\/span><\/p>

<\/span><\/span><\/p><\/td><\/tr><\/tbody><\/table>

The drop has triggered a lot of support measures in recent months, ranging from policy relaxations to rate cuts. Whilst prices are now back to 2015 levels (red line<\/b>\u00a0above), price-to-income ratios have seen even deeper correction – the price-to-disposable income ratio (green line<\/b>\u00a0above) is now back to 2007 levels, a full 18-year roundtrip! The less relevant price-to-per-capita-GDP measure has returned to 2015, similar to the price index correction (blue line<\/b>).<\/span><\/p>

If we looked further back to the Asian Crisis period, the drop in price-income ratios has taken us to even the 1999-2001 period. So are we near a bottom yet?<\/span><\/p>

Cycle bottom near, but not there yet<\/b><\/span><\/p>

The market has recently shown some signs of recovery, as the first shoots of rebound has appeared in price statistics – the latest monthly YoY numbers has registered one recovery (green bar\u00a0<\/b>below), after the longest period of all cities reporting drops (red bars<\/b>) continuously since 2024:<\/span><\/p>

<\/span><\/span><\/p><\/td><\/tr><\/tbody><\/table>

Shenzhen price moves (red line<\/b>\u00a0above) has always been a lead indicator of national trends – each time the line turns up, the number of cities reporting price rises increase. This time however, the SZ line has not made a reversal yet, suggesting perhaps the odd city rising in the latest monthly stats is but ‘counter-trend rallies’ rather than trend changes…<\/span><\/p>

This assessment is corroborated by stock analysts out there too, see\u00a0article 1<\/b>\u00a0for details. The still negative outlook is justified given still very strong global headwinds in both trade wars (article 3<\/b>) and proxy hot wars, which can both flare up further. On the micro side, the inventory glut remains in need of digesting:<\/span><\/p>

<\/span><\/span><\/p>

for more charts see\u00a0<\/i>here<\/i><\/a><\/i><\/span><\/p><\/td><\/tr><\/tbody><\/table>

Both geopolitics and weak retail appetite has been weighing on China’s business sentiment, which has stayed in contracting territory in Q2, following a longer period of drops for most of 2023-24:<\/span><\/p>

<\/span><\/span><\/p><\/td><\/tr><\/tbody><\/table>

As a result, both consumer (blue line\u00a0<\/b>below) and producer prices stayed neutral (at best) to negative:<\/span><\/p>

<\/span><\/span><\/p><\/td><\/tr><\/tbody><\/table>

The saving grace has been the aggressive rate cuts carried out by the PBoC, taking funding costs to levels significantly below HK\/US levels now:<\/span><\/p>

<\/span><\/span><\/p><\/td><\/tr><\/tbody><\/table>

However, the pressure from rate arb is now mounting, especially when most Western nations are seeing their long bonds crash driving up rates. We don’t expect this trend to end any time soon, and as a result, China’s near record discount vs TBs could be due for mean reversion:<\/span><\/p>

<\/span><\/span><\/p><\/td><\/tr><\/tbody><\/table>

What is the bullish case?<\/b><\/span><\/p>

For Shenzhen specifically, the strong momentum of Hongkongers consuming up north seem to be providing some support (article 2<\/b>), and as the porosity of the SZ-HK border continue to increase, price equalisation could have some further legs to run, benefiting the prices there (more than most other cities).<\/span><\/p>

The rate cuts and increasing rental yields are also tilting fundamentals in favour of owning for end users, and buying for investors. The negative yield gap (currently around 2%, see\u00a0blue lines\u00a0<\/b>below) for home owners however could recover more before buying demand returns in numbers:<\/span><\/p>

<\/span><\/span><\/p><\/td><\/tr><\/tbody><\/table>

As a result, we expect likely another 100-200bps of narrowing – either from rental growth or further rate cuts – before prices begin recovering meaningfully. The timing seems to be more likely 2027 on current trajectories from the chart above.<\/span><\/p>

\u00a0<\/span><\/p>

=====================Article 1====================<\/b><\/span><\/p>

Goldman Sachs Says China Home Prices May Drop 10% Before 2027 Market Bottom<\/span><\/h2>

2025\/06\/26 | Iris Hong<\/span><\/p>

China\u2019s property slump could extend into 2027 with a further 10 percent decline in home prices, as policymakers remain cautious about easing measures, according to a Goldman Sachs report released on Wednesday.<\/span><\/p>

[\u2026]<\/span><\/p>

https:\/\/www.mingtiandi.com\/real-estate\/research-policy\/goldman-sachs-says-china-home-prices-may-drop-another-10\/<\/a><\/span><\/p>

\u00a0<\/p>

=====================Article 2====================<\/b><\/span><\/p>

Benefits of Shenzhen\/Hong Kong tourism mainly flow one way<\/span><\/h2>

2025\/06\/12<\/span><\/p>

[\u2026]<\/span><\/p>

While Hong Kong tourists travel north to take advantage of cheaper hotels and restaurants, Mainland tourists arriving from Shenzhen are more inclined to take short trips and focus on sightseeing rather than shopping and restaurants. Shenzhen has now overtaken Macau as the most popular weekend destination for Hong Kong residents.<\/span><\/p>

[\u2026]<\/span><\/p>

https:\/\/www.savills.com\/prospects\/cities-benefits-of-shenzhen-hong-kong-tourism-mainly-flow-one-way.html<\/a><\/span><\/p>

=====================Article 3====================<\/b><\/span><\/p>

Trump Says He’ll Set 50 Percent Tariff on Copper<\/span><\/h2>

2025\/07\/08<\/span><\/p>

[\u2026]<\/span><\/p>

\u201cToday, we\u2019re doing copper,\u201d Trump said at a July 8 Cabinet meeting in front of reporters. \u201cI believe the tariff on copper, we\u2019re going to make it 50 percent.\u201d<\/span><\/p>

[\u2026]<\/span><\/span><\/p>

https:\/\/www.theepochtimes.com\/business\/trump-to-impose-50-percent-tariff-on-copper-5884328<\/a><\/span><\/p>

\u00a0<\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"

…<\/p>\n

China – Has Home Price Bottomed Yet?<\/span> Read More \u00bb<\/a><\/p>","protected":false},"author":8,"featured_media":3812,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","content-type":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","footnotes":""},"categories":[1356,915,8],"tags":[],"class_list":["post-3801","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global","category-mainland-real-estate","category-shenzhen"],"jetpack_featured_media_url":"https:\/\/bricksandmortarmgt.com\/wp-content\/uploads\/2025\/07\/istockphoto-578601930-612x612-1.jpg","_links":{"self":[{"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/posts\/3801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/comments?post=3801"}],"version-history":[{"count":12,"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/posts\/3801\/revisions"}],"predecessor-version":[{"id":3816,"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/posts\/3801\/revisions\/3816"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/media\/3812"}],"wp:attachment":[{"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/media?parent=3801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/categories?post=3801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bricksandmortarmgt.com\/zh_hk\/wp-json\/wp\/v2\/tags?post=3801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}