China's property sector faces a severe liquidity crisis with widespread debt defaults since 2021. Despite government interventions such as reduced down-payments and flexible mortgage rates, new home prices rose modestly by 0.15% in June. The top 100 developers witnessed a significant 41.6% decline in new home sales value from January to June compared to last year, indicating persistent weak demand. Second-hand home prices also fell by 0.73% in June. Data from the China Index Academy highlights ongoing market fragility, showing the challenge of government measures in stabilising the sector amid economic pressures.
China's property sector continues to face significant challenges despite recent government interventions aimed at stabilising the market. Since 2021, the sector has been mired in a liquidity crisis, with many real estate companies defaulting on their debts.
According to data from the China Index Academy, new home prices in 100 Chinese cities increased by just 0.15% in June compared to May, a slower growth rate than the 0.25% seen in May. This modest rise suggests that the recent government support measures have not yet had a significant impact. The top 100 real estate companies in China experienced a 41.6% drop in the value of new home sales from January to June compared to the same period last year, indicating a continued weak demand for new homes.
In May, Chinese authorities introduced a major support package to revive the property sector. Key measures included reducing down payment requirements for home buyers, removing the minimum limit for mortgage rates, and allowing local governments to direct state-owned enterprises (SOEs) to buy completed but unsold apartments from developers and convert them into social housing.
Second-hand home prices across 100 cities fell by 0.73% in June from the previous month, marking the 26th consecutive month of decline. This trend shows the persistent weakness in the market for second-hand homes.
Despite the government's efforts to support the property sector, the impact has been limited so far. New home prices are rising at a slower pace, the value of new home sales has significantly dropped, and second-hand home prices continue to decline. The support package, which includes measures like reducing down payments, lowering mortgage rates, and converting unsold homes into social housing, has not yet reversed the market's downward trend.
China's property market remains in a challenging state. While the government is taking steps to address the issues, it will take time to see if these measures will effectively revive the sector.
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