China home prices fell most in seven years before sector rescue

CHINA’S home prices fell the most in seven years in October, underscoring the depths of the downturn that prompted policymakers to bail out the sector.

New-home prices in 70 cities, excluding state-subsidised housing, fell 0.37 per cent last month from September, a 14th straight decline, National Bureau of Statistics figures showed on Wednesday (Nov 16). The existing-home market fared worse, down 0.47 per cent, the steepest decline since 2014.

The real estate slump is one of the main drags on the world’s second-largest economy, as cash-strapped developers shrink investments and households hoard savings. Falling home prices are doing little to improve homebuyer sentiment, which is seen as seen as key to stemming a more than year-long drop in sales and reviving the industry.

“The home market improvement was weaker than expected in October, and we haven’t seen evidence of a turnaround so far this month,” Chen Wenjing, associate research director at China Index Holdings, said before the figures were published. “It takes time for buyers to step out from wait-and-see mode.”

Home sales dropped 23 per cent last month from a year earlier, deepening from a 16 per cent decline in the previous month, according to Bloomberg calculations based on official data released on Tuesday. Property investment also worsened, slumping 16 per cent.

In the past week, officials have taken clear steps to try to reduce the economic burden of Covid restrictions and to rescue the property market, in a strong sign that the government is turning its attention towards shoring up the economy.

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Regulators last Friday issued a 16-point plan including allowing developers to extend bank loans and trust borrowings, Bloomberg reported. On Monday, “quality” property developers were allowed greater access to money homebuyers pay in advance for new homes. BLOOMBERG