China home prices slump after Covid-19 outbreaks stifle rescue
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Prices for new homes in 70 cities, excluding state-subsidised housing, declined 0.25 per cent from a month earlier.
PHOTO: BLOOMBERG
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BEIJING – China’s home prices fell for a 16th month in December as widespread Covid-19 outbreaks complicated efforts to rescue the slumping property market.
Prices for new homes in 70 cities, excluding state-subsidised housing, declined 0.25 per cent from a month earlier, the same pace as in November, National Bureau of Statistics figures showed on Monday. For the full year, prices dropped 2.3 per cent, according to Bloomberg calculations.
The latest decline came weeks after policymakers unveiled a sweeping plan to revive the housing industry, focusing mainly on the supply side by pledging financial support to cash-strapped developers. Since then, officials have taken further steps to stimulate home buyer demand and ensure the sector’s stable growth.
Yet those measures are being stifled by large-scale coronavirus outbreaks after the government suddenly abandoned its zero-Covid policy.
“Struggling property developers got to breathe some air temporarily after the Chinese authorities made efforts to ease their liquidity pressure,” said S&P Global Ratings credit analyst Esther Liu.
“But the only path lifting them out of the current crisis is a revival of sales.”
The housing slump also continues to hurt the secondary market. Existing home prices dropped 0.48 per cent in December, a bigger fall than the 0.44 per cent decline a month earlier, the figures showed.
Lowering borrowing costs for home buyers is one way that policymakers are trying to boost demand. The authorities said this month that they will extend measures introduced in September allowing cities to lower mortgage rates for first-time buyers if new home prices fall for three consecutive months.
But it is unclear whether such steps are enough to revive a market that has seen sales drop since mid-2021.
Home prices will continue to fall in 2023 as buyers remain in a tight wait-and-see mode, according to a recent China Index Holdings survey of prospective buyers in 100 major cities. Listings of existing residences have continued to climb, weighing on second-hand prices, the property institution estimates. BLOOMBERG
