Janice R. Andrews
In August, China’s new home prices dropped at the fastest rate in more than nine years. This shows that the country’s real estate market is still having problems, even though the government is trying to fix it. The National Bureau of Statistics (NBS) reported that the prices of new homes fell by 5.3% year-over-year. This was the biggest drop since May 2015. This came after a 4.9% drop in July, showing that the sector is still having problems.
New home prices have been going down every month for 14 months in a row, dropping by 0.7% in August to match July’s drop. The steady drop shows that China’s real estate market still has problems, such as producers who are short on cash, home projects that aren’t finished, and buyers who are losing faith. The country’s wider banking system is under a lot of stress because of these things, and the government’s goal of 5% economic growth for 2024 is in danger.
Experts in the field are still not sure what the future holds. According to a poll by Reuters, home prices could drop by 8.5% in 2024 and then again by 3.9% in 2025. This is because the real estate market is still facing a lot of problems.
The top expert at the real estate company Centaline, Zhang Dawei, said that the market is still having trouble getting stable. “The property market is in a slow process of bottoming out, but demand, income, and buyer confidence will take time to recover,” Zhang said. “The market is looking forward to stronger policy interventions.”
Chinese officials have taken a number of steps to help the market, such as lowering mortgage rates and the cost of buying a home, but the reaction from the market has been muted. In the first eight months of 2024, property investment fell by 10.2% and home sales fell by 18%. This shows how bad the crisis really was.
For the most part, smaller towns have seen a bigger drop because they have more open homes and less strict rules on who can buy them. The NBS looked at 70 towns, and only two of them saw home prices rise both monthly and yearly in August.
Economists think that the Chinese government will take stronger steps to stop the economic slump. In a recent research note, Nomura said that Beijing might have to directly pay for domestic projects that are behind schedule. Analysts also expect a number of interest rate cuts, including possibly a drop in the five-year Loan Prime Rate in September. These and other monetary easing steps will help the housing market.
China’s property market slowdown is still one of the biggest problems that officials have to deal with as they try to balance economic growth and sector security.
