China Index Academy revealed that new home prices in the country are growing at a slow pace. The data noted that new home prices across 100 cities dropped from 0.13% in July to 0.11% in August. In 2021, the Chinese government enforced strict regulations to reduce debt levels among developers that caused a liquidity crisis. This has also led to many developers defaulting and halting construction activities. The property researcher said that the market will see some improvement with further implementation and effectiveness of supportive policies.
A private survey recently revealed that new home prices in China are growing at a slow pace despite policies implemented to recover the crisis in the real estate sector. In 2021, the Chinese govt. enforced strict regulations to reduce debt levels among developers, which led to a liquidity crisis in the property sector. Efforts from local policymakers to ease the situation have had little impact on the liquidity or sales.
According to the data by China Index Academy, the average price for new homes across 100 cities dropped from 0.13% in July to 0.11%, indicating an increase of a smaller percentage in August. The data also noted a decrease in higher home prices from 38 cities in July to 35 cities in August. The property researcher said as the property sector steps into the traditional peak of season "Golden September and Silver October," developers can enhance their plans to promote property sales. It added that the market is expected to improve with "further implementation and effectiveness of supportive policies."
While the market is growing slowly, the sector has shown some improvement, as the media in June reported a drop by 4.5% in new home prices. According to the report, this decline was rapid, hitting the lowest since 2015. This downfall has led to many developers defaulting and halting activities on construction sites. Zhang Dawei, an analyst at Centaline Property Agency Ltd., then told the media that the balance between demand and supply in the property sector has fundamentally shifted, and as a result people should not have high expectations for policies to improve the situation. He added that it is unlikely that the sector will experience widespread growth in the future.
In conclusion, Despite efforts by the Chinese government to address the real estate crisis through regulatory changes and supportive policies, new home prices are rising only modestly. The average price increase across 100 cities has slowed, and the number of cities with higher home prices has decreased. The sector's slow recovery is evident from a significant drop in prices reported earlier this year, which led to defaults and halted construction. Analysts suggest that while there may be some market improvement during the traditional peak season, widespread growth remains unlikely in the near future.
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