Updated March 15th, 2024 at 09:56 IST

China's home prices fall for eighth straight month

China home prices plunge 1.4% YoY, steepest drop in 13 months amid regulatory crackdown.

Reported by: Business Desk
China real estate | Image:Shutterstock
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China's home price fall: China's real estate market continues to experience declines in home prices despite efforts to support it. Data from the National Bureau of Statistics (NBS) revealed that new home prices fell for the eighth consecutive month in February, with a 0.3 per cent decrease compared to the previous month, consistent with January's decline.

Prices dropped by 1.4 per cent Year-on-year (YoY), marking the largest decline in 13 months, surpassing January's 0.7 per cent drop. The property market has faced challenges since 2021 due to regulatory measures aimed at curbing developers' high leverage, leading to liquidity issues.

Revival efforts stalled

Despite attempts by authorities to revitalise the sector, such as the launch of a "whitelist" mechanism to increase lending to residential projects and the relaxation of purchase restrictions in major cities like Shanghai and Shenzhen, the market has shown limited improvement.

Analysts attribute the recent price declines to seasonal factors and disruptions caused by the Lunar New Year holiday. Zhang Dawei from Centaline predicts a gradual recovery in demand, homebuyers' income, and confidence throughout the year, anticipating slight price growth in first-tier cities like Beijing and Shenzhen in March.

Price drop affects consumption

The decline in property prices could negatively impact consumption, according to Lynn Song, chief economist for Greater China at ING. While measures like scrapping purchase restrictions and reducing mortgage rates have been implemented, further supportive policies may be necessary.

To boost the struggling property market, China recently announced its largest-ever reduction in the benchmark mortgage rate. Premier Li Qiang pledged targeted measures to stabilise the property sector while ensuring financing for "justified" projects in his government work report earlier this month.

Hwabao Trust economist Nie Wen expects improved sales in first-tier cities in March, but it remains uncertain whether overall property sales will reach a bottom. Further insights into property sales and investment will be provided by the statistics bureau on Monday.

(With Reuters Inputs)

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Published March 15th, 2024 at 09:56 IST