China’s home prices continued to fall last month, underscoring the challenge for Chinese authorities as they step up efforts to salvage the beleaguered market.
Declines in prices of both new and used homes deepened last month from a year earlier, even as they eased slightly on a month-on-month basis, Chinese National Bureau of Statistics figures showed yesterday.
Arresting the slump in values is key to reviving homebuyer demand, which would help developers by providing much-needed cash to repay debts. The liquidity crisis has reached another low as state-backed China Vanke Co (萬科), the country’s second-largest developer by sales, fights to avoid its first-ever default.
Photo: AFP
New home prices in 70 cities, excluding state-subsidized housing, fell 1.9 percent from a year earlier, steeper than January’s 1.2 percent drop. They slid 0.36 percent from January, when they retreated 0.37 percent.
Existing-home prices dropped 5.2 percent year-on-year, worsening from 4.5 percent in January and falling in all 70 cities. They declined 0.62 percent month on month, improving from a 0.68 percent decrease in January.
Declines in prices of new homes are “showing no signs of ebbing,” said Kelvin Lam, a senior economist at Pantheon Macroeconomics. “The second-hand market continues to take a hammering.”
China’s three-year housing slump is dragging on growth in the world’s second-largest economy. The price declines are also adding to deflationary pressure that is weighing on demand.
Chinese authorities have been stepping up support for the housing market by urging banks to provide financing for developers and allowing local governments to ease rules for homebuyers. That has yet to revive new-home sales, which slumped 60 percent last month from a year earlier, private data showed.
China Vanke posted its biggest sales decline in six years.
Chinese Minister of Housing and Urban-Rural Development Ni Hong (倪虹) said last week that China still faces a “severe task” to stabilize the market, acknowledging the current difficulty is related to issues with capital.
Country Garden Holdings Co (碧桂園) faces a liquidation petition in Hong Kong, while Evergrande Group (恒大集團) was ordered to wind up in January.
In another blow to developers, homebuyers have been shifting to the second-hand market due to falling prices and doubts over the timeline for the delivery of new apartments. Existing-home sales overtook new properties by area for the first time last year.
Market watchers caution that a sustainable sales rebound hinges on stronger policies. Now that the central government has given local officials ample autonomy, they should “bear the responsibility” to tweak rules to stabilize the market, Hong said last week.
“Further supportive policies may still be needed,” ING Bank chief economist Lynn Song said. “Establishing a trough for house prices would go a long way towards stabilizing sentiment.”
Existing property values edged up in only two cities last month from a month earlier, the bureau’s figures showed.
New home prices gained in eight cities, fewer than 11 a month earlier.
More cities might see price gains in the new-home market this month, which is typically a busy season for sales, said Yan Yuejin, research director at E-house China Research and Development Institute.
Oversupply might have eased after developers offered more discounts last month to boost sales during the Lunar New Year holiday, he said.
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