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China's home prices dip in May, extending two-year slump despite support
China's new home prices fell in May, extending a two-year long stagnation, official data showed on Monday, highlighting challenges in the sector despite several rounds of policy support measures.
New home prices fell 0.2 per cent month-on-month in May after showing no growth the previous month, according to Reuters calculations based on data released by China's National Bureau of Statistics (NBS).
From a year earlier, prices fell 3.5 per cent in May from a 4.0 per cent decline the previous month.
Home prices are facing renewed downward pressure following the traditional peak season, driven by a combination of policy factors, market demand, regional disparities and shifting buyer sentiment, said Zhang Dawei, chief analyst at Centaline Property Agency.
The market entered a prolonged slump in 2021, with debt-laden developers struggling to deliver homes that buyers had already paid for, further denting consumer confidence.
After policymakers announced supportive policies in recent months as Beijing braced for extended trade tensions with the US, positive signs have emerged in the housing market.
A private survey by property researcher China Index Academy showed the average price of new homes across 100 cities in China climbed 0.30 per cent in May, more than doubling from a month earlier.
Some cities in China have also been easing restrictions on housing provident fund programmes for individual mortgage loans in recent weeks, as the central bank's rate cut for the loans went into effect in early May.
Still, challenges persist. Separately, official data on Monday showed property investment fell 10.7 per cent year-on-year, while sales by floor area dropped 2.9 per cent in the January-May period.
Home prices are expected to fall nearly 5 per cent this year and are set to remain stagnant in 2026, a Reuters poll showed last month.
Though major cities had shown tentative signs of recovery, home prices declined 0.2 per cent in May, ending five consecutive months of 0.1 per cent monthly gains.
Meanwhile, smaller Tier 3 and Tier 4 cities extended their trend of decline since May 2023, with prices falling 0.3 per cent in May, more than April's 0.2 per cent decrease.
Centaline's Zhang warned that without stronger policy support, the traditional June-August slowdown could see steeper price declines than April-May's fall.
He stressed the need for differentiated, city-specific policies targeting various buyer segments.
"In third- and fourth-tier cities, efforts should be intensified to support local industries and attract return migration to fundamentally address insufficient demand." At a cabinet meeting on Friday, Chinese leaders pledged to optimise policies to boost demand, improve supply, and stabilise the property market more effectively.
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