China’s property prices hit nine-year low in July

WEB DESK: In July, new home prices in China dropped by 4.9 per cent year-on-year, marking the largest decline in nine years, according to the National Bureau of Statistics (NBS).

This decline is steeper than the 4.5 per cent fall recorded in June and highlights persistent troubles in the property market despite various support measures from the Chinese government.

The slump in home prices continues to weigh heavily on China’s economy, raising concerns about the feasibility of the country’s 5 per cent GDP growth target for 2024.

Despite efforts to stabilise the market, including reducing mortgage rates and lowering home-buying costs, the impact has been limited. Song Hongwei, research director at Tongce Research Institute, notes that the broader economic downturn has curtailed the effectiveness of these policies.

In July, home prices fell 0.7 per cent from the previous month, marking the 13th consecutive month of decline. Of the 70 cities surveyed by the NBS, only Shanghai and Xian saw month-on-month price increases for new homes, with Shanghai also experiencing a rise in the resale home market.

The Politburo, China’s top decision-making body, has reaffirmed its commitment to supporting the property sector by focusing on completing unfinished projects and converting unsold apartments into affordable housing.

Separate data released on Thursday revealed a significant drop in property sales by floor area, which fell 18.6 per cent in the first seven months of the year compared to the same period last year, a slight improvement from the 19.0 per cent drop observed in the first half of the year.

A recent survey by China’s central bank found that 23.2 per cent of residents expect house prices to continue falling in the third quarter, the highest percentage recorded since 2013.

Analysts predict that more targeted policy measures will be needed to revive the market. Goldman Sachs forecasts further easing measures, including relaxed home purchase restrictions and lower mortgage rates, but anticipates that the market will face a prolonged recovery period before seeing substantial improvements.

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