China’s July home prices fall at a slower pace as state support shows ‘some effect’

‘Marginal improvement’ shows government policy support is having ‘some effect’, researcher says

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A view of the skyline of central Beijing, with housing developments in the foreground, on July 17, 2024. Photo: AP

Published: 12:25pm, 15 Aug 2024Updated: 12:45pm, 15 Aug 2024

Home prices across China suffered a 14th consecutive month of decline in July, a sign that authorities’ rescue package has done little to revive sentiment.

Prices of new homes in 70 medium and large cities dropped 0.6 per cent month on month in May, narrowing from the 0.7 per cent drop a month earlier, according to data published on Thursday by the National Bureau of Statistics.

Second-hand home prices also slid 0.8 per cent compared with the previous month, a slower pace than June’s 0.9 per cent drop and continuing a trend of slowing decline from May’s 1 per cent.

Once a growth engine powering a quarter of China’s GDP, the property sector has now become a drag on the economy since a nationwide campaign began in late 2020 to deleverage home builders and rein in debt.

The country’s economy expanded by a slower-than-expected 4.7 per cent in the second quarter, while weak consumption remains a burden, rising 2.7 per cent year on year in July, below the 3.06 per cent growth forecast by economists.

Authorities have recently issued a slew of measures to revive the property sector, including a 300 billion yuan (US$41.9 billion) relending facility in May to help local governments buy unsold homes – essentially a bailout for beleaguered developers. Shenzhen last week became the first tier-one city to join this initiative.