News Brief
More Trouble For Chinese Economy? Home Prices See Steepest Drop In Eight Years, Casting Doubt On Real Estate Sector
Nayan Dwivedi
Nov 16, 2023, 03:04 PM | Updated 03:03 PM IST
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In a concerning development for China's property market, home prices registered the most significant decline in eight years in October, intensifying concerns over buyer sentiment and placing additional pressure on the government to address the weakening real estate sector.
National Bureau of Statistics figures revealed that new home prices in 70 cities, excluding state-subsidised housing, fell by 0.38 per cent last month, marking the most substantial drop since February 2015, as reported by Business Standard.
This follows a 0.3 per cent decrease in September.
The recent decline contributes to mounting evidence of a persistent housing downturn, as official figures this week indicated a contraction in sales and a deepening decline in property investment.
Despite stimulus measures introduced since August in major cities, the property market's sluggish performance continues to weigh on China's economic recovery.
Chen Wenjing, associate research director at China Index Holdings, remarked that the brief housing market rebound earlier this year proved to be short-lived, attributing the reluctance of homebuyers due to squeezed incomes and an uncertain property market outlook.
The secondary market experienced a more pronounced drop, with prices sliding by 0.58 per cent, the most significant decline since October 2014, according to the figures.
In an effort to support the real estate sector, Beijing is reportedly planning to inject at least 1 trillion yuan ($138 billion) of low-cost financing into urban village renovation and affordable housing programmes.
However, some economists express scepticism about the effectiveness of these measures compared to previous efforts.
The property crisis in China has affected nearly all major developers, struggling with debt repayment and project completion since a credit crunch emerged three years ago.
Notably, China Vanke Company, one of the few remaining investment-grade builders, witnessed a plunge in its dollar bonds recently, following the default of industry giant Country Garden Holdings.
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Nayan Dwivedi is Staff Writer at Swarajya.
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