The prices of China Newly built homes Revenues fell for the 13th straight month in June as they added to government efforts to revive stagnant economic growth.
The total price of new homes in 70 mainland cities fell 0.7 percent in June from a month earlier, a decline that was slightly slower than the 0.71 percent decline reported in May, according to data released by the National Bureau of Statistics. Occupied home prices in June fell 0.9 percent from a month earlier, a decline that was slower than the 1 percent decline in May, the data showed.
The slump in the world’s largest property market has hurt China’s economic growth, which expanded at a slower-than-expected pace of 4.7 percent in the second quarter. The property sector and related industries such as home appliances and building materials account for about a quarter of China’s economic output.
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“The property market remains central” to ongoing concerns about the health of China’s domestic economy, said Harry Murphy Cruise, an economist at Moody’s Analytics. “Investment continues to decline and prices are falling sharply.”
Residential buildings in Shanghai on June 24, 2024. Photo: Bloomberg alt=Residential buildings in Shanghai on June 24, 2024. Photo: Bloomberg>
The persistent price decline is evidence that the raft of stimulus and policy measures unveiled since last year have failed to attract property buyers or sway the market. Many Chinese developers are on the brink of bankruptcy, with an unprecedented 20 million pre-sold homes to complete at an estimated cost of around 3.2 trillion yuan (US$440.7 billion), according to Nomura research.
Since late 2023, Beijing has cut mortgage rates, lowered minimum down payment ratios and eased restrictions on home purchases to support the troubled real estate sector, but the stimuli have not yet had an impact.
“Recent support (policies) are a step in the right direction, but they are still overshadowed by the scale of the problem. Real estate’s tentacles reach deep. When the sector is hurting, the pain is felt across the economy,” Cruise said. “Households are feeling the brunt of the pain. With nearly 80 percent of total household wealth in China tied up in real estate, falling home prices are taking a toll on household finances.”
Second-hand housing markets in the country’s most developed cities fared better. Occupied house prices fell 0.4 percent overall last month in Beijing, Shanghai, Guangzhou and Shenzhen, an improvement of 0.8 percentage points from the 1.2 percent decline in May.
House prices have more room to fall. The sales value of new homes could shrink 20 percent this year to 8.3 trillion yuan, while the size could fall 10 to 15 percent to 800 million to 850 million square meters (9.15 billion square feet), Fitch Ratings wrote in a research report last month.
Shanghai, the commercial and financial center of the mainlandbroke the downward trend of June: prices of newly built houses rose by 0.4 percent, while prices of existing apartments rose by 0.5 percent.
“It is strongly expected that the property market will continue to ease policies with more substantial stimulus to restore investor confidence in the next 12 months,” said Sherril Sheng, research director for the residential sector at JLL China. “An orderly recovery of the primary and second-hand property market in the second half of this year is in sight.”
The real estate consultancy said in a report last week that luxury homeowners in Shanghai are now reluctant to offer big discounts when selling their properties after authorities introduced incentives to make home purchases easier.
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