China home market slump deepens as prices fall for fourth month

Beijing

CHINA'S home prices fell for a fourth consecutive month in December, as the credit crunch in the property sector showed little sign of easing.

New home prices in 70 cities, excluding state-subsidised housing, slid 0.28 per cent last month from November, when they dropped 0.33 per cent, National Bureau of Statistics (NBS) figures showed on Saturday (Jan 15).

A liquidity crisis at industry giant China Evergrande Group is spreading to competitors including Shimao Group Holdings and Guangzhou R&F Properties.

Falling prices may dissuade homebuyers concerned about the value of their assets, making it harder for developers to sell properties and generate much-needed cash.

Recent moves by authorities to ease some of the restrictions on real estate funding have done little to boost the market. Home loan demand stayed weak in December, with households' mid- and long-term loans, a proxy for mortgages, increasing the least since February 2020. Year-end sales campaigns by developers added to downward pressure on prices.

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The intensifying home market downturn poses a challenge for policymakers, given that the sector accounts for about a quarter of gross domestic product.

A growing number of economists are predicting the People's Bank of China will further loosen monetary policy in the first quarter, partly to counter the housing slump. The central bank fuelled speculation it will ease sooner rather than later with its vow in December to take "proactive" action.

In first-tier cities, prices for resale homes rose 0.1 per cent in December month on month from a 0.2 per cent decline in the previous month, the NBS said.

New home prices were unchanged month on month in Beijing and rose 0.4 per cent in Shanghai. BLOOMBERG