China’s New Home Prices Fall for Third Consecutive Month
Concerns Mount as China’s Property Sector Continues to Struggle
China’s new home prices have experienced a decline for the third consecutive month, according to official data released on Thursday. This disappointing trend has dashed hopes of a recovery in demand during a traditionally busy period for home buying. Despite efforts to revive the crisis-hit property sector, the market remains in a deep slump.
September’s Data Shows a Slight Improvement, but Challenges Persist
The data from the National Bureau of Statistics (NBS) reveals that new home prices fell by 0.2% month-on-month, slightly narrowing the drop from August’s 0.3% decrease. On a year-on-year basis, prices were down by 0.1%, matching the decline seen in August. These figures come on the heels of separate data indicating double-digit declines in property sales and investment, highlighting the ongoing challenges faced by the world’s second-largest economy.
Government Stimulus Efforts Aim to Boost Buyer Sentiment
In an attempt to boost buyer sentiment, China has implemented a series of policy stimuli in recent weeks. These measures include relaxing borrowing rules and lifting home-purchasing restrictions in some cities. Analysts suggest that these efforts have started to show signs of stabilizing the property market. However, the full recovery of the market still hinges on the performance in the fourth quarter of this year.
Market Conditions Vary Across Cities
September and October typically represent peak months for new home sales in China. During this period, developers offer promotions and release new properties onto the market. However, out of the 70 cities included in the data, 54 reported declines in prices last month, up from 52 in August. Tier-three cities experienced a 0.3% month-on-month drop, following a 0.4% decrease in August. Analysts from Goldman Sachs attribute these declines to weaker growth fundamentals, net population outflows, and potential oversupply problems in lower-tier cities.
Challenges Persist for China’s Property Sector
The regulatory crackdown on China’s property sector since 2020 has significantly impacted its growth. Excessive debt has been curbed, resulting in tightened liquidity and increased default risks for developers. Despite some major cities experiencing a boost in housing demand, smaller cities continue to struggle with excess supply. The effective disposal of debts for private developers remains a pressing issue for the sector’s recovery.
Country Garden Faces Scrutiny
Investors are closely watching Country Garden, China’s largest private developer, for signs of the sector’s future. The company, headquartered in Guangdong province, recently faced a grace period expiration for a $15 million coupon payment on a bond it issued. As of now, no word has been given regarding payment.
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