China New Home Prices Fall at Faster Pace, Damping Rebound Hopes

Residential housing developments in Shanghai.
Residential housing developments in Shanghai. Photographer: Qilai Shen/Bloomberg
By Bloomberg News
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Takeaways by Bloomberg AI

    China’s new-home prices fell at a faster pace in July, denting optimism that the prolonged property downturn may be nearing a bottom.

    New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.18% from June when they slid 0.15%, figures from the National Bureau of Statistics showed on Monday. Resale home values, which are subject to less government intervention, decreased 0.29%, a slight improvement from the previous month’s 0.32% drop.

    China’s property downturn has weighed on the economy for five years, hampering efforts by officials to spur consumer spending and reduce reliance on exports. Other figures released Monday showed retail sales rose less than economists anticipated, while industrial production expanded at a slower rate.

    Click here for details on home prices

    Signs of a recovery in the real estate market have largely been confined to big cities and pockets of the market such as old apartments in good locations.

    While analysts at firms including Citigroup Inc. and Bank of America Corp. have begun to assert that the sector is finally stabilizing, others are doubtful. Fitch Ratings in late June revised down its forecast for new home sales, saying persistent weakness in lower-tier cities continues to outweigh a recovery in a small number of stronger markets.

    Read More on China Real Estate:

    China’s top officials stopped short of announcing fresh stimulus in a key Communist Party meeting last month, even after economic growth unexpectedly weakened last quarter to below Beijing’s target range of 4.5% to 5%.

    “The Politburo statement softened tone on real estate policy, implying no urgency for major demand-side property easing in most cities,” Citigroup’s Griffin Chan wrote.

    Still, local governments have rolled out marginal steps to shore up sentiment. Earlier this month, Beijing further eased homebuying rules for non-residents, as the capital city joined Shanghai in lifting decade-long restrictions. It followed another incremental step from about eight months ago, when the city relaxed rules for non-resident homebuyers.

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