BEIJING (Reuters) – New home prices in China fell by the fastest pace in nine years in June, official data showed on Monday, as the sector struggled to find a bottom despite government support measures to contain oversupply and boost confidence.
New home prices fell 4.5% from a year earlier, reaching their lowest level since June 2015. The drop was larger than the 3.9% decline in May, Reuters calculations based on data from the National Bureau of Statistics (NBS) showed.
Prices fell 0.7% month-on-month in June, following a 0.7% decline in May.
Since 2021, the sharp decline in the property market has led to a series of defaulters, leaving countless construction sites unused, undermining confidence in the sector, which has traditionally been seen by Chinese households as a safe haven for their savings.
The real estate sector, which at its peak accounted for a quarter of GDP, remains a major drag on the $18 trillion economy.
Authorities have rolled out a series of support measures, including lowering the cost of buying a home in major cities and allowing local governments to buy up some unsold apartments and convert them into affordable housing.
“The supply and demand structure in the real estate sector has fundamentally reversed. (The market) should not have excessively high expectations of the effects of the policy,” said Zhang Dawei, an analyst at Centaline Property Agency Ltd.
“It is unlikely that there will be a general increase in the industry in the future,” Zhang said.
Separate figures from the NBS show that real estate investments fell by 10.1% in the first half of 2024 compared to a year earlier, and that home sales per floor area fell by 19.0%. That is a larger drop than the 20.3% drop in the first five months of the year.
Markets will be closely watching guidelines from the Communist Party leaders’ meeting, which begins Monday and will discuss key economic issues. Measures to redistribute revenue from central government to local municipalities and curb a land-selling addiction exposed by China’s property crisis will top the agenda, policy advisers say.
(Reporting by Liangping Gao, Ella Cao and Ryan Woo; Editing by Jacqueline Wong)
