BofA says ‘too early to call a full-blown recovery’ in China’s struggling housing market
- Several major factors for a sustainable recovery, such as a sustainable pickup in new home sales and improvement in developer funding, are missing, BofA says in report
- Property prices rose in China in February for the first time in 18 months, following a string of rescue measures launched late last year
China’s housing market has yet to see enough evidence of a sustainable recovery despite a rebound in secondary home sales in February, according to Bank of America Merrill Lynch (BofA).
There are signs of positive developments – home sales and prices in tier-one cities are rising faster than expected and investment growth also appears to be improving, the Wall Street bank said in a report on Tuesday. However, the bank added it was still “too early to call a full-blown recovery” in China’s property market.
Several key factors for a sustainable recovery – a sustainable pickup in new home sales, a more broad-based price recovery, improvement in developer funding and a smaller contraction in land sales – are still missing, according to the report.
“We expect that the scale of improvement could be smaller than observed in previous cycles, and a mild recovery is more likely than a full-blown rebound this time round,” Helen Qiao, Greater China chief economist and head of Asia economics at BofA Global Research, said in the report.