China’s home sales slump extends as prices continue to decline

[BEIJING] China’s home sales extended their slump in August even as prices declined and the country’s two biggest cities rolled out additional stimulus measures.

The value of new home sales from the 100 largest property companies stood at 207 billion yuan (S$37.3 billion), according to preliminary data from China Real Estate Information on Sunday (Aug 31). That’s a 17.6 per cent drop from a year earlier, and followed a 24 per cent slump in July. Sales have fallen for six straight months.

China’s housing slump has dragged on for more than four years, with sales falling further since the second quarter. The worsening decline in prices also signals that the effects of a stimulus blitz a year ago are wearing off, stoking concerns about deflation.

Calls for further policy support for the residential market have grown. China’s capital city of Beijing and financial hub of Shanghai both eased home-buying rules in August, but analysts called the changes only “incrementally positive”.

Additional measures could come as early as September, with authorities preparing to speed up urban renovation projects, the Securities Daily reported this month, citing an industry expert.

Even if the market picks up in the short term, China’s longer-term housing outlook remains grim. Demand for new homes in cities is expected to stay at 75 per cent below its 2017 peak in the coming years, due in part to a shrinking population, Goldman Sachs estimated in a June report. BLOOMBERG