A residential complex being built in Nanjing, China. — AFP
Beijing: Prices of new homes in China fell at a quicker pace in February, worsening for the first time in six months despite the country’s latest efforts to prop up the market. Prices in 70 cities, excluding state-subsidised housing, dropped 0.14% from January, when they slid 0.07%, National Bureau of Statistics figures showed Monday.
Values of used homes fell 0.34%, the same pace as a month earlier. Continued price declines may dampen hopes that the real estate market is bottoming out, even as sales show signs of improvement.
Policymakers are struggling to contain the downturn at a time when deflationary pressure and a trade war are adding to the economic gloom.
“Markets should not forget that China’s property collapse is not yet over,” Lu Ting, chief China economist at Nomura Holdings Inc, wrote in a March 10 report. “From the high-frequency data, the property sector appears to be losing some momentum.”
Year-on-year declines eased slightly.
New-home prices fell 5.22% in February, compared with January’s 5.43% drop, the statistics bureau said.
Existing-home prices slid 7.53%, versus 7.8% in January.
Residential sales dipped 0.4% in the first two months from a year earlier, improving from a 17.5% drop last year, other data showed yesterday.
Meanwhile, retail sales and industrial production rose more than economists estimated.
China’s leaders unveiled more steps to shore up the property market at a meeting this month, where they also set a bullish economic-growth goal despite the escalating trade tensions with the United States.
They included a pledge to give regional governments more say in how they buy unsold homes to clear inventory.
Policymakers are considering scrapping a price cap for local authorities during that process, Bloomberg reported.
The changes could improve some of the plan’s unattractive economics for both developers and state buyers.
The meeting “set a positive policy tone, with the greater autonomy of destocking being a key highlight”, UOB Kay Hian analysts Jieqi Liu and Damon Shen wrote in a March 12 note. “We expect the market to further stabilise in March.”
Beijing also sought to “effectively prevent debt defaults” by real estate companies, signalling a further shift toward aiding more players in the industry. — Bloomberg
