China’s ongoing property market crisis is expected to linger, with experts predicting stability may not return until 2026. For Kiwi businesses, this means a tough environment where weakened consumer confidence and falling demand create persistent hurdles.
The roots of China’s property slump back to 2021 with the collapse of Evergrande. The aftermath has been significant: construction projects have stalled, property sales have plummeted, and many Chinese homeowners are left with unfinished apartments. A recent report from New Zealand’s Ministry of Foreign Affairs and Trade highlights the extent of the problem, noting that Chinese home prices dropped by 4.5 per cent in the year to June 2024, their lowest level in nearly a decade. Property investment has fallen 10.2 per cent in just the first seven months of 2024.
The impact has been significant for New Zealand exporters. With Chinese consumers cutting back and prioritising value for money, Kiwi businesses have been forced to lower prices to stay competitive. This strategy has helped keep goods flowing into the Chinese market but has also hit export revenues.
The forestry sector has been hit especially hard. Logs remain one of New Zealand’s key exports, and China accounted for a massive 92 per cent of these shipments in the year to June 2024. Yet, total log imports into China have consistently declined since the property crisis began. In 2023 alone, New Zealand’s log exports to China were valued at $3.6 billion, a 24 per cent drop from their 2021 peak.
Despite these setbacks, there are some silver linings. Exports of New Zealand softwood, especially pine, have shown resilience, growing by 5 per cent over the past year. Kiwi pine has proven to be an appealing choice for Chinese buyers due to its affordability compared to timber from Europe or the United States, its versatility, and New Zealand’s reputation for supply chain reliability—something that stood out during the Covid-19 pandemic.
Even with this bright spot, experts warn that demand for logs is unlikely to return to previous highs. China is actively working to reduce its economy’s reliance on the property sector, which means any recovery in the housing market will likely come slowly. Analysts suggest that significant improvements, such as stabilised house prices, may not materialise until 2026.
Until then, New Zealand exporters must adapt to a market where cautious consumers and pricing pressures dominate, making resilience and innovation more critical than ever.
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