China Home Prices Defy Recovery, Extending Declines

China Home Prices Defy Recovery, Extending Declines

  • China’s new home prices declined for a third consecutive month in September, dashing hopes for a recovery during a peak home-buying season.
  • Despite policy efforts, property sales investments continued to fall, signifying ongoing challenges.
  • China’s property sector, once a growth engine, faces regulatory constraints and uncertainty, exemplified by Country Garden’s recent bond payment issue.

Oct.19 : In September, China’s new home prices experienced their third consecutive month of decline, painting a gloomy picture for the property market despite it being traditionally a peak period for home buying. Official data revealed a 0.2% month-on-month drop in new home prices, a slight improvement from August’s 0.3% decline. Year-on-year, prices were down by 0.1%, mirroring the trend observed in August.

To counter this challenging situation, China has ramped up its policy efforts in recent weeks. They’ve eased borrowing restrictions and removed some home-purchasing restrictions in select cities to rekindle buyer interest.

However, data on property sales investment, released earlier, displayed double-digit decreases, indicating that the Chinese property market is still grappling with its difficulties, despite positive headline gross domestic product figures. September and October traditionally serve as peak months for new home sales in China, with developers rolling out promotions and introducing fresh properties to the market.

Out of the 70 cities included in the home price data, 54 reported price declines last month, an increase from 52 in August. While support measures managed to boost housing demand in major cities, where new home prices increased by 0.4% as opposed to a 0.2% fall in Beijing, smaller cities continued to wrestle with surplus housing, contributing to the ongoing slump in the nationwide property sector.

China’s property sector, once a significant driver of economic growth, has been under regulatory scrutiny since 2020. Authorities have taken steps to control excessive debt, which led to tighter liquidity and higher default risks for developers. Investors have been closely monitoring the actions of Country Garden (2007.HK), China’s largest private developer, to gain insights into the sector’s future.

The recent expiration of the grace period for a $15 million coupon payment on a bond issued by Country Garden has heightened uncertainties, with no official word on the payment status yet. This has added to the turbulence in an already uncertain market.

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Ahmed Hassan

Ahmed Hassan, a distinguished Ph.D. holder in Political Science from Stanford University, is your go-to expert for in-depth political analysis. His well-researched articles provide valuable insights into the complex world of politics. Ahmed's commitment to balanced reporting and informed commentary ensures you're always up-to-date with the latest developments in the political landscape.

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