China’s new home prices extended their decline in August, highlighting the continuing weakness in the country’s prolonged property downturn and its impact on the broader economy.New home prices fell 0.1% in August from July, matching the monthly decline recorded in both June and July, according to Reuters calculations based on data released by the National Bureau of Statistics.On an annual basis, new home prices fell 3.0% in August, narrowing from a 3.2% decline in July. It was the slowest pace of annual decline recorded this year.
Tier-one cities show signs of stabilisation
The latest data showed a mixed picture across China’s property market, with major cities performing better than smaller markets.New home prices in tier-one cities rose 0.1% in August from the previous month, reversing a decline in July. Resale home prices in tier-one cities also edged higher during the month.However, prices in tier-two and tier-three cities continued to decline, pointing to persistent weakness outside China’s largest urban markets.The continued weakness in housing prices has also remained a drag on domestic consumption and local government income, while the property sector has continued to weigh on economic activity.
Beijing rolls out measures to support housing market
The Chinese government introduced a series of measures last month aimed at moving developers away from the presale model, which had come under pressure after homebuyers protested when construction on properties they had paid for stalled during the property downturn.Financial regulators also extended the maximum term for mortgage loans to 40 years from 30 years.The measures are aimed at strengthening homebuyer confidence and creating a less risky funding model for real estate development over the longer term.However, analysts said the measures were unlikely to produce a tangible improvement in housing demand in the short term, according to Reuters.
Property sales and construction remain weak
Other indicators continued to show little evidence of a broad turnaround in the property market.Property sales, real estate investment and new construction starts all declined sharply during the first eight months of the year, according to separate official data.The prolonged property weakness has also contributed to a broader slowdown in China’s economy. Economic growth slowed to 4.3% in the second quarter.Tuesday’s official data indicated that the world’s second-largest economy would continue to rely on external demand to offset weak domestic consumption and an investment downturn.The latest home-price figures therefore underscored the continued challenges facing China’s property sector, with the market yet to show a sustained recovery despite recent policy measures.