China’s new home prices edged down in June from the previous month for the weakest result this year, new data showed on Saturday.
Prices were the same as the previous year, retreating from the 0.1% increase in May, according to calculations based on National Bureau of Statistics (NBS) data.
The disappointing result increases pressure on policymakers for more stimulus as economic recovery falters.
The property sector, which accounts for a quarter of activity in the world’s second-biggest economy, slumped sharply last year as developers defaulted on debts and suspended construction of pre-sold housing projects.
Uncertain economic outlook
The central and local governments and regulators have announced a slew of policies over the past year to prop up the sector.
Measures have ranged from extended financial support for developers to multi-pronged incentives for home buyers.
But the uncertain economic outlook and persistent weakness in the sector have dented confidence and home demand, dampening hopes for any quick revival.
Weakness in home prices and falling exports are adding to pressure on policymakers to do more to prop up the real estate and revive sluggish demand.
All eyes on Polituro meeting
Markets widely expect more stimulus around a meeting of the ruling Communist Party’s Politburo late this month, setting the tone for economic policies in the second half of the year.
“The property market is in dire need of strong policies to boost confidence as small-scale policies can no longer rescue the dwindling sentiment,” analyst Chen Xiao, at property data provider Zhuge House Hunter, said.
Policies such as boosting employment and incomes must strengthened to support home buying, Chen said.
Some 31 of the 70 cities monitored by NBS recorded month-on-month rises in new home prices, down from 46 in May. Prices were flat after rising in May in tier-one cities including Beijing and tier-two cities. They fell 0.1% in tier-three cities.
‘Profound changes in supply and demand’
There is room for “marginal optimisation” of property polices considering profound changes in supply and demand in the real estate market, Zou Lan, a senior official at the People’s Bank of China (PBOC), said on Friday.
“PBOC officials hinted at further property policy easing in the press conference on Friday, and we expect the July Politburo meeting to emphasise the need to stabilise the property market,” Goldman Sachs economists wrote in a research note.
The central bank on Monday extended until the end of 2024 some policies in a November rescue package for the cash-strapped sector. But the uncertain economic outlook and weakness in the sector have dented confidence, dampening hopes of any quick revival.
A quarterly PBOC survey showed 16.5% of households believe housing prices will fall in the third quarter, down from the previous quarter, when 14.4% of households expected a decline.
- Reuters with additional editing by Jim Pollard