China home sales require more easing to escape ‘current malaise’, analysts say, as report finds prices rose in June but are still well below 2022 levels
- In tier-one cities, where demand is the strongest, sales grew 8.6 per cent month on month while dropping 27 per cent year on year, China Index Academy says
- Current malaise ‘will require cuts by at least 50 basis points to really spark interest’ and a 10-basis point cut is ‘more symbolic than having any tangible effects’: Economist Intelligence Unit
The “current malaise” afflicting home sales in major mainland Chinese cities will require more stimulus from Beijing before a bounce back in the market, analysts said.
Home sales by gross floor area rose 18.5 per cent in June compared to the previous month, but were 44.2 per cent lower than a year ago, in 13 cities tracked by China Index Academy (CIA), one of the country’s largest independent real estate researchers, for a report published on Monday.
In China’s tier-one cities, where demand is the strongest, sales grew 8.6 per cent month on month while dropping 27 per cent year on year. Tier-two cities recorded more drastic changes, rising 25.3 per cent month on month while being down almost by half year on year, according to CIA’s report.
China’s central bank cut the five-year loan prime rate, a reference rate for mortgages, from 4.3 per cent to 4.2 per cent last week, and analysts said they would see how lower mortgage rates might stimulate the market.
“The current malaise of the market will require cuts by at least 50 basis points to really spark interest in buying homes,” said Xu Tianchen, a China economist at Economist Intelligence Unit. “A 10-basis point one is more symbolic than having any tangible effects.”
