HomeInsightResearch
China Home Prices Drop Accelerates as Stimulus Effects Fade
05 Sep 2024
New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.73% from July, following a 0.65% decline a month earlier, National Bureau of Statistics figures showed Saturday. Values of used homes fell 0.95%, compared with a 0.8% decline a month earlier.
 
The figures highlight Beijing’s struggle to contain the property downturn at a time when deflationary pressures are adding to the economic gloom. Efforts to spur domestic demand have done little to revive the housing market, endangering the government’s growth target and spurring economists to call for additional stimulus.
 
The prolonged slump in property values has deterred homebuyers from forking out money as they wait for further price declines.
 
“There is still substantial pressure for new-home prices to keep falling,” said Chen Wenjing, research director at China Index Holdings. “In the busy coming autumn season, only a few big cities are likely to see homebuying activities pick up.”
 
Policymakers have taken steps to ramp up homebuyer demand this year, including reducing mortgage borrowing costs and easing restrictions on purchases. Yet signs of a sales recovery in June proved to be short-lived as property buyers anticipated prices of new homes to drop further.
 
The glacial pace of rescue measures on the ground is adding to the pain. Beijing’s campaign to buy unsold homes to ease oversupply has seen slow implementation, driven in large part by the unattractive economics of the plan for local governments.
 
“Home sales have stayed weaker than expected” despite government support, said Raymond Cheng, head of China property research at CGS International Securities Hong Kong. “If the issue is not solved, property prices and transaction volume contraction will continue.”
 
Shares of Chinese developers have slid further into a bear market, with a Bloomberg Intelligence gauge dropping more than 40% from a mid-May high.
 
China is poised to cut interest rates on more than $5 trillion of outstanding mortgages as early as this month, people familiar with the matter told Bloomberg this week, as the government accelerates a move to spur consumption.
 
The move, however, will have “minimal” direct impact on the property market even if it helps household income and consumption, according to Cheng at CGS.
 
Explore More Research
LEHMAN Capital
LEHMAN Capital brings together world-leading data solutions to power the most ambitious companies and professionals.
Need help? Contact us
+61 (0) 383 766 284
Level 13,2 Elizabeth St,Melbourne,
Victoria 3000, Australia
Copyright © 2021 LEHMAN Capital | All Rights Reserved |Powered by LEHMAN Capital   | Privacy Statement  |Disclaimer Statement   | Cookie Policy
Cookie
We use cookies to personalize content and ads and to analyze our traffic. Please click here for our Cookie Policy and for more information on what kinds of cookies we use. We also share information about your use of our site with our advertising and analytics partners. Click here for our Privacy Policy.
If you decline to the use of cookies, your information will not be tracked when you visit this website. Only a single cookie will be used in your browser to remember your preference not to be tracked.