China home prices see biggest drop in seven years, recovery bang on, Real Estate News, ET Real Estate

Beijing: ChinaNew home prices fell at the fastest pace in seven years in October, weighed down by COVID-19 restrictions and industry-wide problems, reflecting a deep contraction that has prompted authorities to step up support for the sector in recent days. Inspired to

New home prices fell 1.6% year-on-year after falling 1.5% in September, based on Reuters calculations national bureau of statistics (NBS) data on Wednesday. This was the biggest annual decline since August 2015 and the sixth month of contraction.

Regulators on Sunday outlined 16 measures as part of the rescue package aimed at boosting liquidity in the property sector, including extending loan repayments. Markets hailed the measures, which pushed property stocks higher on Monday.

In an effort to address the liquidity crunch, China’s banking and insurance regulator also said on Monday it would allow property developers to access some pre-sale funds.

But analysts worry that the support measures may be ineffective because they are not targeting weak demand and think the recovery is likely to fizzle out, as evidenced by a drop in asset data earlier this week. .

“It should be noted that the current problem facing the real estate industry is no longer just property, but exceeding economic income expectations,” said Zhang Dawei, chief analyst at property agency Centerline.

“In the short term, the property market will remain in recession in the fourth quarter.”

China’s property sector has been grappling with defaults and stalled projects since authorities began cracking down on excessive leverage in the mid-2020s, hurting market confidence and hitting economic activity.

New home prices fell 0.3% month-over-month, after a 0.2% decrease in September. Of the 70 cities surveyed by the NBS, 58 reported a month-on-month price drop in October, compared to 54 in September.

Tuesday’s data also pointed to further weakness in the cash-strapped sector, showing that property investment fell at the fastest pace in 32 months in October and sales fell for the 15th consecutive month.

The soft data comes even as more than 200 local governments have taken steps to revive the sector this year, including rebates on mortgage rates and rolling back personal income tax for some home buyers.

“Given the long-standing disruptions from the dynamic zero-COVID policy, falling and disproportionate demographic demand, and the long-standing stance of policymakers that ‘housing is for living, not speculation’, we maintain the view that the recovery of the property sector should be gradual and bumpy,” analysts at Goldman Sachs said in a note on Wednesday.