BEIJING: China’s property sector is expected to grapple with “persistent weakness” for years, Goldman Sachs analysts said, adding that its problems would continue to drag on the country’s economic growth.
Weaknesses are particularly pronounced in lower-tier cities and private developer financing, they said in a client note, adding that policymakers, who have vowed not to use the sector as a short-term lever to spur growth, seem keen for there to be less economic and fiscal reliance on the industry.
“As such, we only assume an ‘L-shaped’ recovery in the property sector in coming years,” the note said.
China’s property sector has over the past two years been thrust into a severe debt crisis – initially triggered by government moves to rein in ballooning debt – with many developers defaulting on payments as they struggle to sell apartments and raise funds.
Goldman Sachs said it expected more measures to support the sector, including a further easing in credit conditions for homebuyers, additional cuts to mortgage rates and mortgage down-payment ratios, as well as a further relaxation of restrictions on home purchases and resales in large cities.
A state-run newspaper last week urged patience amid market speculation of more stimulus for the sector.
