BEIJING – China’s new home prices fell for another month in July, but the pace of decline showed tentative signs of easing in major cities as local governments stepped up efforts to support homebuyers. Despite these glimmers of stability, the nation’s property sector remains mired in a severe, four-year slump, prompting calls for more decisive government intervention.
According to data released by the National Bureau of Statistics (NBS) on Friday, new home prices dropped 0.3% month-on-month in July, matching the decline seen in June. However, on an annual basis, prices fell 2.8%, a modest improvement from the 3.2% year-on-year drop recorded a month earlier.
The slight narrowing of price falls was most notable in China’s tier-one cities. Overall, 60 of the 70 cities surveyed by the NBS reported month-on-month price declines.
The persistent weakness in the real estate market—once a driver of a quarter of the nation’s economic activity—continues to weigh heavily on growth. Policymakers face the critical task of reviving the sector to meet China’s annual GDP growth target of “around 5%.”
“Given the high exposure of Chinese households to real estate, establishing a trough on prices is one of the most important factors to restoring confidence and generating a sustained consumption recovery,” financial services firm ING said in a note to clients.
Despite multiple rounds of stimulus policies, a sustained recovery has remained elusive. Separate data highlighted the sector’s ongoing challenges, with property investment falling 12% year-on-year in the first seven months of the year and property sales by floor area dropping 4.0%.
This has led to urgent calls for more comprehensive support. “A clear turnaround and stabilisation are not yet in sight. The government should roll out a full set of property-market stabilisation measures without delay,” said Li Kai, chief investment officer at Beijing Shengao Fund Management Co.
In recent months, local governments have acted by relaxing rules for using provident funds for home purchases and offering direct subsidies. The capital city of Beijing, for example, recently scrapped purchasing curbs for qualified buyers in its suburban areas.
Analysts believe that while these local incentives help, a broader, top-down strategy may be needed. “Urban renewal initiatives and large-scale public housing procurement could help establish a stable baseline for the sector,” said Yuhan Zhang, Principal Economist at The Conference Board’s China Center. He cautioned, however, that “private market recovery is likely to remain uneven, with lower-tier cities facing greater challenges.”
