Home prices continue to fall in China
By Abigail Townsend
Date: Friday 15 Mar 2024
(Sharecast News) - House prices continued to slide in China last month, official data showed on Friday, heaping more pressure on the country's struggling property sector.
According to the National Bureau of Statistics, new home prices fell 1.4% year-on-year, double January's 0.7% decline.
It was the biggest fall since January 2023 and the eighth consecutive monthly decline.
Month-on-month, new home prices fell by 0.3%, in line with January's drop, according to calculations by Reuters.
China's property sector has been under pressure since 2021, when Beijing moved to crackdown on the vast levels of debt being built up by property developers.
It left many firms cash poor and struggling to service debt, while demand weakened as the economy slowed.
Since then Beijing has moved once again, this time to prop up the ailing sector with a number of support measures. But it has so far failed to stabilise.
Stephen Innes, managing partner at SPI Asset Management, said: "Reversing the struggling property sector is crucial for stimulating broader economic growth and restoring investor confidence that the market has bottomed out."
Lynn Song, chief economist, Greater China, at ING, said: "Given the heavy weighting of property in household portfolios, it is of the utmost importance for China to stabilise the property market if it is to restore confidence.
"Declining property prices will create a negative wealth effect, acting as a headwind to consumption.
"We anticipate that real estate will remain the main drag on growth in 2024, and this drag is likely to persist over the medium term, as it will take time to work through excess housing inventories."
In China's most affluent cities - so-called tier-one cities - average prices for new homes fell 1% year-on-year, while second-hand homes fell 6.3%.
In total, house prices fell in 59 cities, up from 56 in January.
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