BEIJING, Sept 14 (Askume) – Prices of new homes in China fell the most in more than nine years in August, official data showed on Saturday, as support measures failed to spur meaningful improvement in the property sector.
Askume calculated based on data from the National Bureau of Statistics (NBS) that the price of new homes fell 5.3% year-on-year, the biggest drop since May 2015, while the decline in July was 4.9%.
From a monthly perspective, new home prices fell for the 14th consecutive month, a decline of 0.7%, which is on par with July’s decline.
The property market is struggling with debt-ridden developers, empty apartments and waning buyer confidence, putting pressure on the financial system and threatening this year’s 5% economic growth target.
A Askume survey predicts home prices in China will fall 8.5% in 2024 and 3.9% in 2025 as the sector struggles to stabilise.
Zhang Dawei, chief analyst at real estate agency Centerline, said China’s real estate market is still in a gradual downward slide, and it will take some time for homebuyers’ demand, income and confidence to recover.
“The market is expecting stronger policies.”
Real estate investment fell 10.2% and home sales dropped 18.0% in the first eight months, according to official data released on Saturday.
Chinese policymakers have stepped up efforts to support the industry, including lowering mortgage rates and the cost of buying a home, which has boosted demand somewhat in major cities.
Smaller towns are particularly vulnerable as there are fewer restrictions on home purchases and the number of unsold homes is higher, underlining the challenges faced by authorities in balancing supply and demand in different areas.
Only two of the 70 cities surveyed by the National Bureau of Statistics recorded a quarterly decline in housing prices in August.
“We believe the slowdown in growth will be more severe
“Given the new challenges in the second half of the year, we expect Beijing will eventually be forced to play the role of builder of last resort as it seeks to provide direct funding for delayed housing projects,” Nomura Securities said in a research note on Friday.
China could lower interest rates on more than $5 trillion of outstanding mortgages as soon as this month, according to Bloomberg.
In support of the mortgage rate cut, ANZ economists said in a research note on Friday that the five-year loan prime rate is likely to be cut in September, while the medium-term lending facility (MLF) and lending rates will rise by 20%.
