BEIJING – China’s property sales between May and June showed the largest monthly drop in 2023, based on sales by floor area, and investment in property also slumped, official data showed on Monday, reinforcing the case for more stimulus to bolster a waning economic recovery.

Property sales by floor area declined 28.1 per cent year on year, extending a 19.7 per cent fall in May, according to Reuters calculations based on data from the National Bureau of Statistics (NBS).

For June, total property investment amounted to 1.2849 trillion yuan (S$237.2 billion), falling 20.6 per cent from a year earlier after a 21.5 per cent drop in May, according to Reuters calculations.

China’s property sector, which accounts for about a quarter of the economy, remains firmly in a downtrend, with new home prices for June stalling in the weakest showing this year. The flat result from a month earlier was below May’s 0.1 per cent gain, according to Reuters calculations based on NBS data. Prices were also unchanged from a year earlier, retreating from a 0.1 per cent increase in May.

The property sector has been badly hit since 2022 as cash-squeezed developers were unable to finish apartment construction, prompting a mortgage boycott by some buyers.

Three years of tough Covid-19 measures and a weak economy have also prompted would-be home buyers to keep cash in deposits rather than make fresh investments or pay off existing mortgages, despite the dismantling of virus curbs late last year.

The authorities have provided support measures to revive the embattled sector, including policy interest rate cuts in June and the central bank’s recent extension of some property loan repayments.

Demand, however, remains sluggish and developers are struggling to finish pre-sold housing projects, many of which were suspended, triggering a rare protest last year from home buyers threatening to stop mortgage repayments.

For the period from January to June, property sales by floor area were down 5.3 per cent year on year compared with a 0.9 per cent fall in the first five months.

Property investment fell 7.9 per cent in the first six months, after slumping 7.2 per cent in January to May from the same period a year earlier.

New construction starts measured by floor area fell 24.3 per cent year on year, after a 22.6 per cent drop in the first five months.

Funds raised by China’s property developers were down 9.8 per cent year on year after a 6.6 per cent slide in January to May. REUTERS