UBS lowers China growth forecasts on deeper-than-expected property downturn

By Foster Wong

UBS Group AG downgraded its forecast for China’s growth for this year and the next, citing a deeper-than-expected property market slump that’s yet to see a bottom. 
 

With China’s economic momentum subdued since March amid the real estate downturn and a tight fiscal policy stance, the investment bank now expects gross domestic product to expand 4.6 per cent in 2024, down from an earlier estimate of 4.9 per cent. For next year, UBS sees growth at 4 per cent, down from 4.6 per cent previously.

“We expect weaker property activities to have a bigger drag on the overall economy than earlier expected, including through household consumption,” UBS economists including Wang Tao wrote in a note Wednesday.

Despite China easing its policies toward the property market since the end of 2022 — including reduced down-payment requirements, lower mortgage rates and fewer restrictions on home purchases — the implementation of the measures has been slow, with limited impact, according to UBS.

“China’s property demand and supply fundamentals have changed in recent years, market confidence is low amid weak household income growth, and inventory levels are high while destocking implementation has been slow,” the economists wrote. The bank downgraded its outlook for China’s property sector, and now expects a bottoming out of new starts only in mid-2026. 

China’s housing slump has shown little sign of reversing, even though the pace of its fall stabilized, the latest data unveiled earlier this month. Home prices dropped at a largely unchanged rate on a month-on-month basis, but declined faster in annual terms. New home starts continued to plunge at a clip of around 20 per cent from a year ago. The crisis has dragged down everything from the job market to consumption and household wealth over the past two years.