China home prices drop for 9th month as demand stays weak

New home prices in 70 cities, excluding state-subsidised housing, dropped 0.17 per cent last month from April. PHOTO: REUTERS

BEIJING (BLOOMBERG) - China's home prices fell for a ninth month in May, signalling demand remains weak despite increased government support for the slumping property market.

New home prices in 70 cities, excluding state-subsidised housing, dropped 0.17 per cent last month from April, when they slid 0.3 per cent, National Bureau of Statistics figures showed on Thursday (June 16).

The figures suggest that China's real estate sector is far from a rebound amid a worsening job crisis and weak economic recovery. Chinese households have turned to hoarding cash this year, a sign that people are bracing for tougher times even as some cities emerge from crippling Covid-19 lockdowns.

Chinese officials have been stepping up efforts to arrest a property slowdown that has weighed on the world's second-largest economy for almost a year. These include urging banks to lend more, easing mortgage costs and partially relaxing ownership rules.

"Whether the easing measures can take effect remains to be seen," China Real Estate Information researchers wrote in a note earlier this week. "The majority of developers have not seen a full sales recovery."

Wenzhou, an eastern Chinese city with a population of nearly 10 million, where home values declined for four months, has started to allow first-time home buyers to repay only mortgage interest for the first three years, according to its official WeChat account.

There have been some early signs that the market may be bottoming. New home sales rose 26 per cent from April, the first month-on-month gain since December, bureau data showed on Wednesday.

However, the stop-start reopening from Covid-19 lockdowns may be too late to save some cash-strapped property developers.

Existing home prices declined 0.39 per cent from a month earlier, the largest drop since February 2015.

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