China’s new home prices plunge at fastest pace in 9yrs

China’s home prices saw a significant drop in June, the steepest in nine years. This decline, coupled with a decrease in property sales and investment, is prompting policymakers to consider providing more stimulus to help the struggling sector.

In June, new home prices in China dropped by 4.5 per cent year-on-year, the largest decline since June 2015. This surpasses the 3.9 per cent drop seen in May, based on Reuters calculations using National Bureau of Statistics (NBS) data.

Prices also fell by 0.7 per cent month-on-month in June, continuing the trend from May.

Since 2021, the property market has been declining rapidly, resulting in developer defaults and stalled construction projects.

This has shaken consumer confidence in the sector, which was previously a popular choice for Chinese households to invest their savings.

The property sector, which once accounted for a quarter of China’s GDP, remains a major drag on the nation’s $18 trillion economy.

Authorities have taken steps to stabilise the market by cutting home buying costs in major cities and enabling local governments to buy unsold apartments for conversion into affordable housing.

Harry Murphy Cruise, an economist at Moody’s Analytics, stated that the recent support is a positive step but falls short of addressing the magnitude of the problem.

The property sector’s impact is extensive, and its challenges have widespread effects on the economy, he added.

Attribution: Reuters