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China’s new home prices remained under pressure in July as weak demand continued to affect the property market. New home prices fell 0.1% from the previous month, while the annual decline narrowed slightly to 3.2% from 3.3% in June, according to Reuters calculations based on National Bureau of Statistics data. Only 17 of 70 surveyed cities recorded monthly price increases. Property sales, investment and new construction starts also declined at a faster pace during the first seven months of the year. Local governments continue to introduce measures to support housing demand, but a broad recovery remains uncertain.
China’s new home prices fell 0.1% in July from the previous month, the same pace of decline recorded in June, as demand remained weak across much of the country.
According to Reuters calculations based on data from the National Bureau of Statistics, new home prices declined 3.2% year-on-year in July. The annual decline was marginally lower than the 3.3% fall recorded in June.
The figures show that the improvement in some major housing markets has not yet translated into a wider recovery. Of the 70 cities covered by the official survey, only 17 recorded month-on-month increases in new home prices in July. The number remained below one-third of the surveyed cities.
Centaline Property analyst Zhang Dawei said the uneven performance reflected a K-shaped recovery in which major cities were seeing relatively better conditions while lower-tier markets continued to face pressure. He expects this gap to remain, with major cities likely to focus on unlocking demand from homebuyers looking to upgrade, while smaller cities concentrate on reducing housing inventories.
The weakness in prices has been accompanied by continued declines in other parts of the property sector. Official data showed that property sales, investment and new construction starts all fell at a faster pace during the first seven months of the year.
China’s prolonged property downturn has also added pressure on the wider economy. Weak home sales and declining property values have affected household consumption and investment, while manufacturing and exports have provided stronger support.
The broader economy expanded 4.3% year-on-year in the second quarter, its slowest growth in more than three years. July data also showed that retail sales grew less than expected, while industrial output growth slowed, adding to concerns over domestic demand.
The recovery in larger cities also weakened in July. New home prices in tier-one cities were unchanged from the previous month after rising 0.1% in June. Prices in tier-two cities declined 0.1%, compared with no change in the previous month, while prices in tier-three cities fell 0.3%.
Existing-home prices performed somewhat better in the largest cities. Prices in tier-one cities rose 0.2% month-on-month in July, although the increase was slower than the 0.3% rise recorded in June. Existing-home prices continued to decline in smaller cities.
Local governments have continued to introduce measures aimed at supporting housing demand. Beijing further relaxed home-buying restrictions earlier this month, allowing more households to purchase homes within the central part of the city. The capital also increased the amount homebuyers can borrow through the housing provident fund programme.
China’s top leadership also pledged toward the end of July to support the economy through faster fiscal spending and additional policies. However, the measures did not indicate a major new stimulus package for the property sector, despite the leadership acknowledging the need to stabilise the housing market.
The current trend suggests that China’s property market remains in an adjustment phase, with the recovery concentrated in selected major cities. Continued weakness in sales, investment and construction indicates that developers and buyers remain cautious, while local authorities are likely to continue using targeted measures based on conditions in individual markets.
Source Reuters
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