China's new home prices fall again but declines ease in major cities
The month-on-month decline was calculated by Reuters, based on data released by the National Bureau of Statistics (NBS) on Friday (Aug 15). In June, prices fell 0.3 per cent.
China's property market has been stuck in a severe slump for more than four years, with declining prices, sales, new investment and construction starts weighing on economic growth. Analysts are unsure when conditions will bottom out.
'Given the high exposure of Chinese households to real estate, establishing a trough on prices is one of the most important factors to restoring confidence and generating a sustained consumption recovery,' ING said in a note to clients.
Reviving the real estate sector, which in its heyday accounted for a quarter of China's economic activity, is a key task for policymakers as they strive to meet the country's annual GDP growth target of 'around 5 per cent' amid domestic and external headwinds.
Of the 70 cities surveyed, 60 reported month-on-month declines, with the pace of falls slightly narrowing in tier-one cities.
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On an annual basis, new home prices fell 2.8 per cent in July, versus a 3.2 per cent drop in June.
Notably, year-on-year declines are narrowing modestly across tier-one, tier-two, and tier-three cities.
'A clear turnaround and stabilisation are not yet in sight. The government should roll out a full set of property-market stabilisation measures without delay,' said Li Kai, founding partner and chief investment officer of Beijing Shengao Fund Management.
A sustained recovery in the housing market has remained elusive despite multiple rounds of policies to stimulate demand and help qualified developers with their liquidity shortages.
Resale home prices fell further year on year and month on month in July, with the declines narrowing in tier-two and tier-three cities but widening in tier-one cities.
Separate data showed China's property investment fell 12 per cent year on year in January to July and property sales by floor area fell 4 per cent.
'Urban renewal initiatives and large-scale public housing procurement could help establish a stable baseline for the sector, provided these policies are executed effectively,' said Yuhan Zhang, Principal Economist at The Conference Board's China Center.
'Nonetheless, private market recovery is likely to remain uneven, with lower-tier cities facing greater challenges,' he said.
The central government has, in the past few months, continued to call for stabilising the property market, signalling further policy support.
An increasing number of local governments have relaxed rules for people to use their provident funds to pay for home purchases. Some also offered subsidies for buying homes.
Capital city Beijing in August scrapped curbs for qualified buyers to purchase homes in the city's suburban areas, though it kept the curbs in place within the fifth ring road, a major expressway around the central area. REUTERS
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