The trade war risks worsening the housing slump that has dragged on economic growth and has only recently been showing signs of abating. While the US and China made a truce on tariffs last week, trade ructions may add to woes for workers in the export-driven economy, curtailing housing demand.
“The elephant in the room is China’s property market,” ANZ Group Holdings Ltd. economists led by Raymond Yeung wrote in a recent note. “The tariff shock is caused by the unpredictability rather than the tariff itself.”From a year earlier, declines in values eased. New-home prices fell 4.55%, less than March’s 4.99% drop, the statistics bureau said. Existing-home prices slid 6.76%, compared with a 7.25% decrease a month earlier.
Chinese leaders signaled last month that they will take a patient approach in defending growth despite the deepening trade war with the US, pledging to “fully prepare” emergency plans to ward against increasing external shocks. Authorities reiterated their commitment to existing programs to aid the property sector, such as renovating urban villages and run-down homes while streamlining policies for local governments to buy unsold homes.
Top officials have signaled that a recovery in the property sector will help to shield the country from the US tariff hikes. China has been shifting to pro-consumption policies, including an effort to boost household income, provide more consumption subsidies and strengthen the social safety net.
“We believe the government has become more determined to reboot the property sector,” said Edward Chan, credit analyst at S&P Global Ratings. “This will be key to supporting consumer confidence, which Beijing has identified as its economic priority.”
