China home prices fall again as calls grow for more action

[BEIJING] China’s home prices fell in December, closing another tumultuous year for the real estate industry as its debt crisis persists. 

New-home prices in 70 cities, excluding state-subsidised housing, dropped 0.37 per cent from November, when they slid 0.39 per cent, figures from the National Bureau of Statistics showed on Monday (Jan 19). Resale home values, which are subject to less government intervention, slid 0.7 per cent, the most in 15 months. 

China’s property downturn has weighed on the economy for more than four years, tipping more cash-strapped builders into distress. China Vanke, once the country’s biggest builder, has been negotiating with bondholders to stave off a default threat. Jingrui Holdings became the latest defaulted builder to be wound up in Hong Kong last week. 

“Beijing cannot afford to let its property sector slide indefinitely,” Lu Ting, chief China economist at Nomura Holdings, wrote in a recent note. “Much more decisive action is needed to truly stabilise the property sector and the overall economy.”

All 70 major cities tracked by the government saw second-hand home prices fall, the fourth month in a row that declines were across the board.

Nationwide residential sales tumbled to 7.3 trillion yuan (S$1.4 trillion) last year to the lowest since 2015, separate government figures showed. Sales were down 55 per cent from their 2021 peak. Real estate investment declined 17.2 per cent.

The readings underscore how housing remains a drag on Asia’s largest economy, even though gross domestic product met the government’s target last year by expanding 5 per cent.

Chinese leaders vowed to increase policy support for the residential market last month, including by encouraging the acquisition of existing housing stock to reduce inventories. Policymakers are also considering measures including providing new homebuyers with mortgage subsidies, people familiar with the matter said in November. 

Home prices will keep falling for at least two more years, John Lam, UBS Group’s head of China property research, said in an interview in November. Lam, who was previously optimistic about an industry recovery, said values of used homes in major cities have dropped more than a third from their peak levels. 

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China’s December new home prices fall again; annual decline steepest in five months

Fitch Ratings warned in October that new-home sales by area could decline another 15 per cent–20 per cent before the sector stabilises. The bleak outlook suggests banks’ property-related bad debt will likely stay “elevated” in 2026, Fitch said. BLOOMBERG