The Chinese housing market is poised to record a strong growth recovery given the fast rise in transactions in 2023

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Amid the improvement in the global pandemic situation and the adjustment of control and prevention policies, transactions in the domestic real estate market have grown significantly in China. Over the next 12 months, China is expected to further promote the market’s smooth transition to a new development pattern. Notably, the Chinese government is not revitalizing the real estate market as part of its short-term strategy to revive economic growth, instead, it aims to drive a more long-term stable and healthy development in the domestic industry.

The policy measures announced by the Chinese government have started to take effect and there has been a considerable improvement in market confidence and the number of transactions has also increased, according to the People's Bank of China. The central bank also noted that the financing environment has also improved significantly for the property sector. In their effort to revive the growth of the domestic real estate market, the central bank issued 16 policy measures at the end of 2022, which were aimed at supporting the healthy development of the market.

• Of these 16 policy measures, China announced a differentiated credit policy aimed at driving the sales of housing units across the country. Furthermore, China also continued to guide the reduction of the effective rate and down payment ratio. This is part of the country’s strategy to better support the housing demand.
• The Chinese central bank has also guided financial institutions in the country to offer normal financing services to developers. This is part of the central bank’s strategy to maintain stable and orderly financing in the Chinese real estate market. Furthermore, the central bank also launched a special fund of 350 billion yuan to ensure the delivery of buildings.

Alongside the special fund announced by the central bank, ease in movement restrictions is also expected to support the recovery of the housing market in the Chinese residential industry. Both the workers and materials are now able to enter the construction site smoothly, which has subsequently resulted in an increase in the resumption rate of housing projects across China.

The housing market is also expected to receive growth support from stable housing prices. As house financing gets better across the country, transactions are expected to surge significantly from the short to medium-term perspective, thereby supporting the growth of the residential construction market in China.

With local provinces asking developers to finish government-supported housing projects, the delivery of new housing units is also expected to increase significantly before the end of 2023 in China.

• In February 2023, Henan Province asked developers to deliver projects that were backed and funded by the government. The province has asked property developers to complete the projects before the end of October 2023.

These policy measures, coupled with the improving confidence in the Chinese real estate market, will keep aiding the growth recovery of the housing market over the next 12 months in 2023. Alongside the residential market, ConsTrack360 also expects the commercial and infrastructure construction segment to also post a robust recovery from the short to medium-term perspective in China.

• In the infrastructure space, China has ramped up investment to drive economic growth. Hundreds of infrastructure projects have been planned across the region, with many already under construction. From public services to smart-city facilities, several infrastructure construction works are underway in China. The reduced raw material prices have also helped in the undertaking of new infrastructure projects in 2023.

To support the local infrastructure projects in the region, China has been issuing special-purpose bonds in recent years. With more special-purpose bonds in the pipeline, ConsTrack360 expects a further increase in the Chinese infrastructure space from the short to medium-term perspective.

In the commercial construction segment, growing private investment in the development of new offices and data center spaces will also aid the construction industry growth in China from the short to medium-term perspective. NetEase, for instance, has commenced the construction activities of a new data center in Guizhou Province.

To know more and gain a deeper understanding of the construction market in China, click here.