China home prices drop faster even as top cities ease rules
CHINA’S home prices fell more steeply in September, despite recent easing measures introduced by major cities to revive the struggling property market.
New-home prices in 70 cities, excluding state-subsidised housing, dropped 0.41 per cent from August, the biggest decline in 11 months, National Bureau of Statistics figures showed Monday. Resale home values fell 0.64 per cent, the steepest slide in a year.
China’s four-year property downturn has been dragging on the economy, which grew at the slowest pace in a year in the third quarter. The prolonged price slump is deterring homebuyers who are concerned about the viability of real estate as a store of wealth.
“The property market remains in the doldrums,” Kelvin Lam, senior China economist at Pantheon Macroeconomics, wrote in a note last week. “A recovery in prices is unlikely until 2027, when inventories fall to more reasonable levels.”
Used-home prices fell in all 70 major cities monitored for the first time in a year.
Not all the figures were negative, with new-home prices in Beijing rising 0.2 per cent from a month earlier, and Shanghai seeing a 0.3 per cent gain.
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The two cities eased home buying rules in August by allowing eligible residents to purchase an unlimited number of properties in the outer suburbs. Both cities saw sales climb last month, according to China Index Holdings.
But in Shenzhen, which followed through with similar easing in early September, new-home prices slumped 1 per cent, more than double the pace of a month earlier. That’s partly because developers resorted to price cuts to boost transactions, China Index Holdings said.
“The bigger month-on-month drop suggested that sellers still rely on price cuts to encourage sales,” said Yan Yuejin, vice-president of Shanghai E-house’s research arm.
Separate government figures showed gross domestic product expanded 4.8 per cent in the three months ended September, down from 5.2 per cent in the previous quarter. Real estate investment tumbled 13.9 per cent in the first three quarters, marking a new low since 2014, according to Bloomberg calculations based on official data.
The slumping real estate sector has hurt sentiment in the domestic economy, even though exports remain strong. Fixed-asset investment notched a rare contraction in the first nine months of the year, while capital spending in infrastructure and manufacturing also slowed. Still, the economy is still on track to reach this year’s expansion goal, the statistics bureau said.
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