China home prices fall at fastest pace in eight months, stimulus calls rise
Cities across the country have also relaxed homebuying curbs and eased restrictions on housing provident fund programmes for individual mortgages
[BEIJING] China’s new home prices fell at the fastest monthly pace in eight months in June, highlighting the struggle to revive demand despite repeated policy measures and growing calls for additional support.
The 0.3 per cent month-on-month drop, calculated by Reuters based on data released by the National Bureau of Statistics (NBS), extended a weak trend that has persisted since May 2023. Prices fell 0.2 per cent on month in May.
On an annual basis, new home prices in June declined 3.2 per cent, versus a 3.5 per cent drop in May.
The property sector, which accounted for about a quarter of economic activity prior to its meltdown roughly four years ago, remains a drag on economic growth. That has complicated policymakers’ efforts to achieve a target of “around 5 per cent” GDP growth amid factory-gate deflation, subdued consumer demand and geopolitical tensions with the United States.
The post-peak season slowdown has revealed fresh market vulnerabilities, stemming from policy impacts, demand fluctuations, regional disparities and weakened confidence, said Zhang Dawei, chief analyst at Centaline Property Agency, who stressed the need for additional supportive measures. The peak season for home purchases is around March and April.
Prices of resale homes across all city tiers fell both year on year and month on month, the data showed.
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Separate NBS data on Tuesday (Jul 15) showed property investment slumped 11.2 per cent year on year in the first six months, worsening from the previous month, while sales by floor area fell 3.5 per cent.
“Policies are expected to remain focused on the demand side, such as easing home purchase restrictions and reducing transaction taxes and fees,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
Current measures to support the sector include enabling debt-laden developers to sell housing inventories and undeveloped land to local governments, promoting urban village redevelopment, and reducing mortgage rates and down-payment requirements to stimulate demand.
Cities across the country have also relaxed homebuying curbs and eased restrictions on housing provident fund programmes for individual mortgages.
The State Council, China’s cabinet, pledged in a meeting on Jun 13 to conduct a nationwide survey of land for development and property projects under construction to enhance policy effectiveness.
China Vanke, a state-backed property developer facing liquidity pressures, forecast a wider net loss of up to 12 billion yuan (S$2.1 billion) for the first six months, citing a sharp drop in project settlements, low profit margins and extra provisions.
“As the property market searches for a bottom, we expect it to remain polarised between top and low-tier cities, luxury and mass segments, and state and privately-owned enterprises,” JPMorgan said in a research note on Monday. REUTERS
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