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China’s New Home Prices Down Again Amid Weak Demand

New home prices fell in China for the second straight month in September, with falls in 54 cities, official statistics showed on Monday

Credit lines to China developers
Residential buildings are seen near a construction site in Beijing, on April 14, 2022. Photo: Reuters


New home prices fell in China for the second straight month in September with mortgage boycotts, a long debt crisis and Covid curbs weighing on buyer sentiment.

New home prices in September fell 0.2% month-on-month after a 0.3% drop in August, according to calculations based on National Bureau of Statistics (NBS) data released on Monday.

Out of the 70 cities surveyed by Bureau, 54 reported price falls in September, up from 50 cities in August. In monthly terms, new home prices in tier-two cities fell 0.2% and declined 0.4% in tier-three cities.

On a year-on-year basis, new home prices in September declined at the fastest pace since August 2015, falling 1.5% after a 1.3% decline in August.

China’s property sector has been plagued by multiple headwinds after regulators clamped down on excessive borrowing since mid-2020. Some analysts have said the sector won’t recover till 2024.

Problems deepened from the liquidity crunch, with debt-ridden developers defaulting on bond payments, homebuyers halting mortgage payments on hundreds of stalled projects and pandemic restrictions continuing to undermine demand.

Beijing has rolled out a flurry of policies to revive the sector, including relaxing mortgage rates and refunding individual income tax for some homebuyers. But demand has yet to recover, with a decline in developer sales and investment underscoring the bleak outlook.


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Property Investment Down, Weak Demand

The property market has been affected by falling confidence over the economic outlook, especially as cash-strapped developers halted construction on many projects, Zhang Dawei, chief analyst at property agency Centaline, said.

“The property markets in lower-tier cities still face strong headwinds from weaker growth fundamentals than large cities, including net population outflows and potential oversupply problems,” Goldman Sachs said in a research note.

Separate data from the statistics bureau also showed the sector remained in a protracted slump, with developers struggling with weak demand.

Property sales by floor area in September declined for a 14th consecutive month in September, down 16.15% on year from a slump of 22.58% in August, according to calculations based on official data.

Property investment fell 12.1% from a year earlier, slightly narrowing from a 13.8% fall in August.


Housing ‘Not for Speculation’

China wrapped up its twice-a-decade leadership reshuffle on Sunday, with Xi Jinping securing a third term as general secretary of the ruling Communist Party and packing the new Politburo Standing Committee with allies.

China reiterated its “housing is for living, but not for speculation” in the full work report of the Communist Party Congress.

Analysts said they did not expect big policy changes after the Congress.

“There is little room to give more help to real estate property developers as doing so will risk the credibility of government reform (for property developers, that means the deleveraging reform),” Iris Pang, chief economist for Greater China at ING, said.

“There could be some targeted policy to help mortgagors that bought uncompleted projects but they should not be considered preferential policies for real estate developers.”


  • Reuters with additional editing by Jim Pollard




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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.


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