Real Estate

China Home Prices See Biggest Drop in Seven Years in October

 

China’s new home prices fell at their fastest pace in more than seven years in October, government data showed on Wednesday.

The latest figures show the impact from Covid-19 restrictions that have affected all sectors and worsened the property slump that has intensified since the government imposed its ‘three red lines’ policy to restrict lending to badly indebted developers.

New home prices slumped 1.6% year-on-year after a 1.5% fall in September, according to calculations based on the latest National Bureau of Statistics (NBS) data.

That is the biggest annual drop since August 2015 and the sixth month of falling prices.

On Sunday, regulators outlined 16 measures as part of a rescue package aimed at boosting liquidity in the property sector, including loan repayment extensions.

Markets cheered the measures, which sent property stocks soaring on Monday.

ALSO SEE:

US, Europe Chase Cheaper EV Battery to Curb China Dominance

 

 

Access to Pre-Sale Funds

In an effort to relieve the liquidity crunch, China’s banking and insurance regulator also said on Monday it would allow property developers to access some pre-sale funds.

But analysts worry the support measures could be ineffective because they are not targeting weakening demand and think the recovery is likely to be bumpy, as evidenced by downbeat property figures earlier this week.

“It should be noted that the current problem facing the real estate industry is no longer just for property, but more of economic income expectations,” Zhang Dawei, chief analyst at property agency Centaline, said.

“In the short-term, the property market will remain in the doldrums in the fourth quarter.”

China’s property sector has struggled with defaults and stalled projects since authorities started to clamp down on excessive leverage in mid-2020, hitting market confidence and weighing on economic activity.

 

Prices Down in 58 Cities

New home prices declined 0.3% month-on-month after easing 0.2% in September. Out of the 70 cities surveyed by the NBS, 58 reported month-on-month price falls in October, up from 54 cities in September.

Data on Tuesday also pointed to further weakness in the cash-strapped sector, showing property investment fell at its fastest pace in 32 months in October and sales slumped for the 15th straight month.

The softer data comes even as more than 200 local governments have taken steps to revive the sector this year, including relaxing mortgage rates and refunding individual income tax for some homebuyers.

“Considering the protracted disruptions from dynamic zero-Covid policy, falling and unbalanced demographic demand, and policymakers’ long-held stance that ‘housing is for living in, not for speculation’, we maintain our view that the property sector recovery should be gradual and bumpy,” Goldman Sachs analysts said in a note on Wednesday.

 

  • Reuters with additional editing by Jim Pollard

 

 

ALSO SEE:

 

China Property Bonds Being Shunned Over Default Danger

 

China’s Economy Stumbles as Property, Covid Struggles Rage

 

China Regulator Seen Checking Banks’ Property Loan Exposure

 

Asia-Focused Funds Snared by Deepening China Property Crisis

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

Recent Posts

China Services Activity Jumps in January as Covid Curbs End

China's dropping of travel curbs resurrected services activity in January for the first time in five…

56 mins ago

China to Build Antarctica Ground Stations for Ocean Satellites

The China Aerospace Science and Technology Group is to build the $6.53 million stations amid…

15 hours ago

China Battery Firm CATL Seen Eyeing $5bn Swiss Listing Boost

The global depositary receipts listing could even see CATL raise $8 billion if market conditions…

16 hours ago

Xpeng Secures Key Permit to Launch ‘Flying Car’ – TechCrunch

The 'special flight permit' from the Civil Aviation Administration of China will allow the Xpeng…

20 hours ago

Paris Club Seen Giving Sri Lanka Support for IMF Bailout

The Paris Club of creditor nations is ready to provide financing assurances for Sri Lanka,…

20 hours ago

China Needs Tech Self-Reliance to Avoid Being Strangled: Xi – SCMP

President Xi Jinping warned this week that China must speed up moves to become self-reliant…

21 hours ago