BEIJING: China’s new home prices fell for the second straight month in September, as its property sector grappled with a mortgage boycott, a heightened debt crisis and COVID-19 restrictions that dimmed the economic outlook.
New home prices in September fell 0.2% month-on-month after a 0.3% drop in August, according to Reuters calculations based on National Bureau of Statistics (NBS) data released on Monday. On a year-on-year basis, new home prices in September declined at the fastest pace since August 2015, falling 1.5% after a 1.3% decline in August.
Out of the 70 cities surveyed by NBS, 54 reported price falls in September, up from 50 cities in August. China’s property sector has been beset by multiple headwinds after regulators clamped down on excessive borrowing since mid-2020.
Problems have deepened from the liquidity crunch, with debt-ridden developers defaulting on bond payments, home buyers staging mortgage boycott on stalled projects and pandemic restrictions continuing to undermine demand.
China has rolled out a flurry of policies to revive the embattled sector, including relaxing mortgage rates and refunding individual income tax for some home buyers.
“China’s property market remains sluggish and is expected to stabilise in the fourth quarter, but still hovering at a low level,” said Zhang Dawei, chief analyst at property agency Centaline.
The property market has been affected by falling confidence over the economic outlook, especially as cash-strapped developers halted construction on many projects, Zhang said.
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Separate data from the statistics bureau showed property sales by floor area in September declining for a 14th consecutive month in September, down 16.15% on year from a slump of 22.58% in August. Property investment fell 12.1% from a year earlier, slightly narrowing from a 13.8% fall in August.
China reiterated its “housing is for living, but not for speculation” in the full work report of the Communist Party Congress.
President Xi Jinping secured a precedent-breaking third leadership term after the week-long congress ended on Sunday.
Analysts from Nomura said in a note that a comprehensive solution to the property sector might not be introduced until after March 2023, when Beijing’s political reshuffle is fully completed.