BEIJING (Reuters) – New home prices in China fell at their fastest rate in nine years in June, official data showed, as the battered housing sector struggles to find a bottom despite government support measures to curb oversupply and boost confidence.
New home prices fell 4.5 percent from a year earlier, the lowest since June 2015, according to Reuters calculations based on data from the National Bureau of Statistics (NBS), down from a 3.9 percent drop in May.
Prices fell 0.7% month-on-month in May, and continued to fall 0.7% in June.
A sharp decline in the real estate market since 2021 has led to a succession of developers defaulting on loans and leaving many construction sites idle, undermining confidence in the real estate sector, which has traditionally been favored by Chinese households as a safe haven for their savings.
The real estate sector, which accounted for a quarter of GDP at its peak, remains a major drag on the $18 trillion economy.
Authorities have rolled out a series of support measures, including lowering the cost of buying a home in major cities and allowing local governments to buy up some unsold apartments and turn them into affordable housing.
“The supply and demand structure in the real estate sector has fundamentally reversed. (The market) doesn’t need to have overly high expectations about the effectiveness of the policy,” said Zhang Dawei, an analyst at Zhongyuan Real Estate.
“Prices are unlikely to rise across the sector going forward,” Zhang said.
Separate figures from the Office for National Statistics showed property investment fell 10.1% year-on-year in the first half of 2024, while home sales on a floor area basis fell 19.0%, deeper than the 20.3% drop in the first five months of this year.
Markets will be closely scrutinizing directives from the Communist Party leadership when it meets on Monday to discuss key economic issues. Policy advisers expect income redistribution measures from the central government to local governments and curbing reliance on land sales, which has been exposed by China’s property crisis, to be top of the agenda.
(Reporting by Liangping Gao, Ella Kao and Ryan Wu; Editing by Jacqueline Wong)