Business & Investment

New home prices in China suffered the first month-on-month decline since 2015

New home prices in China’s largest city fell in September, down month-on-month since April 2015, a sign that the country’s overall real estate industry’s persistent weakness is pervading the real estate market. ..

New home prices have fallen compared to August in more than half of the 70 cities surveyed, according to data from the National Bureau of Statistics. A numerical analysis of Goldman Sachs found that prices fell 0.5% on an annual basis, including seasonal adjustments.

Data will put pressure on policy makers who are striving to cool the country’s vast real estate sector but are facing Default rise The slowdown in activity across the sector, which has supported economic growth for years.

New home prices rose 3.8% year-on-year, but fell monthly Disappointing third quarter GDP data This week, for the first time since the coronavirus pandemic began, we saw a sharp slowdown and contraction in growth across the real estate industry.

Further price declines in the real estate market began last summer in fear of an asset bubble, Liquidity crisis of developer Evergrande..

Property reform forms part of a series of ambitious steps as President Xi Jinping approaches the end of the second semester, from the technology sector to education. In addition to limiting developer borrowing, the government may introduce restrictions on mortgage lending this year and soon launch property taxes to curb speculation.

“In the first half of this year, many people still believed that the restraint on these assets was temporary,” said Tin Lu, Nomura’s chief China economist. “As the Chinese government has become more and more determined to regulate these real estate properties, first and foremost, expectations of Chinese households for home prices have changed.

“They may not expect their home prices to rise forever,” he added. “It’s very, very important.”

Chinese real estate developers often sell their homes on a so-called prepayment, which customers buy before they build their homes. Missing bond payments from the world’s most debt-rich developer, Evergrande, can pose a risk to consumer confidence in purchases, coupled with possible defaults on restructuring and some of its peers.

Home purchases fell 17% in September and 20% in August, according to Bloomberg calculations based on official data.

In the third quarter, China’s real estate industry output fell 1.6% year-on-year, the first contraction since the pandemic began. China’s gross domestic product was 4.9% year-on-year in the same period, up only 0.2% compared to the second quarter.

House price data “can be distorted by price controls,” Lou said, “almost everywhere” in China.

New home prices in China suffered the first month-on-month decline since 2015

https://www.ft.com/content/2764776a-2ee6-4cb2-94f8-05c4603dc6d5 New home prices in China suffered the first month-on-month decline since 2015

Back to top button