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China’s New Home Prices See Fourth Straight Monthly Drop

More than 50 cities saw declines in monthly sale prices in October, with estimates saying there are about 20 million pre-sold units not yet constructed

Sunac China has sought bankruptcy protection in a New York court.
An advertisement of property developer Sunac China Holdings is seen at a residential complex in Shanghai. File photo: Reuters.


China’s new home prices dropped for a fourth straight month in another worrying sign for the country’s crisis-hit property sector and its wider economy.

Dozens of cities were hit by declines, the most since the peak of the Covid-19 pandemic last year, as new home prices in October dropped 0.3% month-on-month after a 0.2% dip in September, according to Reuters calculations based on National Bureau of Statistics (NBS) data.

Once a key engine of economic growth accounting for around a quarter of China’s economic activity, a regulatory crackdown since 2020 to curb debt has tightened liquidity and raised default risks for developers, delaying many projects.


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Authorities have rolled out a flurry of measures to prop up the pivotal sector, including relaxing curbs on home purchases and cutting borrowing costs but homebuyers remain cautious.

“The most important reason for the bearish home prices is that demand is weak, buyers don’t know if pre-sold homes they buy will be delivered on the dates promised by the developers,” said Ma Hong, senior analyst at Zhixin Investment Research Institute.

Nomura estimated there are around 20 million pre-sold units that are either not yet constructed or delayed. That is equivalent to 20 times the number of unfinished projects by indebted developer Country Garden as of end-2022.

Bearish home prices follow data on Wednesday showing some improvement in industrial output and retail sales, which both beat expectations in October, but overall investment growth was tepid and property sales and investment slumped sharply.

“Residents remain uncertain about income growth, and there are poor returns on financial investments in the country. They are hesitant to buy a big-ticket item like a house,” Ma added.

Out of 70 cities, 56 reported declines in monthly prices last month, marking the most cities number since October 2020, up from 54 in September.

House prices in three major cities – Beijing, Shenzhen and Guangzhou – all fell month-on-month in October. Compared with a year earlier, nationwide prices were down 0.1%, matching a decline in September, August and July.


Property Policies Call

For existing homes, NBS data showed 67 cities posted month-on-month price declines in October, up from 65 in September.

The property market is still in adjustment and transformation, and there will be “twists and turns” in the economic recovery, Liu Aihua, spokesperson for the National Bureau of Statistics, said on Wednesday.

Despite the lifting of strict Covid measures late last year and a slew of support measures, the world’s second-biggest economy has struggled to get back on solid footing, largely due to weak consumer confidence and the deepening property crisis.

“House prices are expected to continue to fall in the traditionally low season of November and December,” said Zhang Dawei, analyst at property agency Centaline.

Zhang said property policies, especially in the first-tier cities, need to be stepped up.

China’s central bank plans to provide at least $137 billion of low cost financing to the country’s urban village renovation and affordable housing programmes.


  • Reuters with additional editing by Sean O’Meara


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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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