China’s falling home prices slow descent slightly as decline extends to 14 months

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.

Among first-tier cities, where there is greater demand for housing, new home prices dropped 0.5 per cent in Beijing, 0.8 per cent in Guangzhou, and 0.9 per cent in Shenzhen. Meanwhile, second-hand home prices fell by 0.9 per cent in Guangzhou and 1.2 per cent in Shenzhen, and remained unchanged in Beijing.

Shanghai was the only city across China to see month-on-month growth in both new and second-hand home prices, rising by 0.2 per cent and 0.1 per cent, respectively.

“The month-on-month new home prices have shown marginal improvement, indicating that the government’s policy support is showing some effect, particularly in reducing home-buying costs and stimulating demand,” said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institute.

“Given that the year-on-year decline continues to widen, it is essential to further reinforce housing policies, with a particular focus on exploring home-buying demand.”

For second-hand homes, Yan said that local governments should “leverage” the decline in prices as “an opportunity to highlight the benefits of ‘affordable housing,’ while actively encouraging various forms of social capital to invest in second-hand homes”.

In the meantime, the nation’s developers are still struggling. China’s top 100 developers reported home sales totalling 2.1 trillion yuan in the first seven months of this year, a 37.5 per cent decline compared with the same period last year, according to China Real Estate Information Corp.