China’s new home prices fell at the fastest pace in more than nine years in August, official data showed on Saturday (Sep 14), as supportive measures failed to spur a meaningful recovery in the property sector. New home prices were down 5.3 per cent from a year earlier, the fastest pace since May 2015, compared with a 4.9 per cent slide in July, according to Reuters calculations based on National Bureau of Statistics (NBS) data. In monthly terms, new home prices fell for the fourteenth straight month, down 0.7 per cent, matching a dip in July. The property market continues to grapple with deeply indebted developers, incomplete apartments, and declining buyer confidence, straining the financial system and endangering the 5 per cent economic growth target for the year.
A Reuters poll predicted China’s home prices will fall by 8.5 per cent in 2024, and decline by 3.9 per cent in 2025, as the sector struggles to stabilise. China’s property market is still in the process of gradually bottoming out as homebuyers’ demand, income and confidence will take some time to recover, said Zhang Dawei, chief analyst at property agency Centaline. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up “The market is looking forward to a stronger policy.” Property investment fell 10.2 per cent and home sales slumped 18 per cent year on year in the first eight months, according to official data also released on Saturday.
Chinese policymakers have intensified efforts to support the sector including reducing mortgage rates and lowering homebuying costs, which has partly revitalised demand in major cities. SEE ALSO China’s unworkable housing rescue math is prolonging the crisis Smaller cities, which face fewer home purchase restrictions and have high levels of unsold inventory, are especially vulnerable, highlighting the challenges faced by authorities to balance demand and supply across various regions. Of the 70 cities surveyed by NBS, only two reported home price gains both in monthly and annual terms in August. “With our view of a worsening growth slowdown under new headwinds in H2, we expect Beijing will be eventually forced to serve as the builder of last resort by directly providing funding to those delayed residential projects that have been pre-sold,” said Nomura in a research note on Friday.
This move, if implemented, would be a significant step towards easing the country’s housing market woes and could potentially signal a broader shift in China’s economic policy. The potential interest rate cut is being discussed as a way to address the growing concerns about a potential housing bubble and the rising risk of defaults on mortgages. The Chinese government has been grappling with a slowing economy and a property market that has been struggling for years.
