JPMorgan economist says China’s housing market crash is still not over

China’s troubled housing market will continue to see softness as a slew of government stimulus and support measures have not been “satisfactory” in propping up the sector, according to a JPMorgan economist.

The “housing market crash is still not over yet,” Haibin Zhu, chief China economist at JPMorgan told CNBC’s “Squawk Box Asia” Monday, adding home prices would not stabilize until 2025 at the earliest.

The average price for new home sales across 100 Chinese cities rose by a modest 0.11% from July, a further slowdown from June’s 0.13% growth, according to data released by China Index Academy Saturday. Resale home prices declined 0.71% from the previous month, according to the report.

Both new and resale houses saw average prices drop 1.76% and 6.89% from a year ago, respectively, as the country’s housing market remains deeply mired in crisis.

Bloomberg reported Saturday that China is weighing a plan to lower homeowner borrowing costs by allowing refinancing on as much as $5.4 trillion in mortgages.

But analysts are skeptical the proposed measure would be effective in stimulating homebuyer sentiment and overall consumption.

“Some people think it will free up consumption — that’s only one side of the story,” according to Winnie Wu, chief China equity strategist at BofA Securities. Lower mortgage rates would cause banks to cut deposit rates to protect their margins and ensure stability in the financial system, she said, noting that reduced deposit rates would eventually cut into interest income on household savings.

The mortgage refinancing measure would also do little to boost new home demand, according to JPMorgan’s Zhu.

“Even if the mortgage refinancing policy materializes, it’s not a policy to revive the housing market,” he said, adding that the policy “has nothing to do with the new home demand, mainly benefiting the existing homeowners.”

“Rate cut is not the best policy, squeezing banks’ margin is not going to go very far,” BofA Securities’ Wu said, adding the government needs to “create a positive feedback loop rather than this downward spiral.”