Home News China’s property woes deepen in Aug as prices, sales and investment drop

China’s property woes deepen in Aug as prices, sales and investment drop

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  • New home prices fall at fastest monthly pace since November 2021
  • New home prices fall at fastest pace since August 2015
  • Property sales fall for 13th straight month

BEIJING (Reuters) – China’s property market woes worsened in August, with home prices, sales and investment all falling, according to official data. Mortgage boycotts and developer financial difficulties further undermined confidence in the sector.

New home prices fell 0.3% month-on-month in August, a Reuters calculation based on data from the National Bureau of Statistics (NBS) showed. Prices have not changed in June and July.

More importantly, prices extended their year-on-year contraction over the four months of August, with prices falling 1.3% last month, the fastest annual pace in seven years, fueling long-term homebuyer disgust. suggests.

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The growing real estate problem is weighing on the prospects of the world’s second largest economy. Once a major driver of economic growth, the sector has rapidly gone from crisis to crisis since 2020 after regulators stepped in to reduce developer debt overhangs.

“Despite the overall easing of policies, the sector is still trying to find a bottom, but it is nearing the bottom,” said Zhang Dawei, chief analyst at real estate firm Centaline.

Authorities have taken steps this year to support the sector, including easing home purchases, reducing down payments, lowering mortgage rates and significantly lowering home sales prices. read more

Zhang said he hopes Chinese authorities will take more measures in first- and second-tier cities such as Beijing and Shanghai to stabilize markets and restore buyer confidence in the short term. Stated.

Confidence in the sector has been undermined by a nationwide mortgage boycott since late June. This is because developers have halted construction of pre-sold housing projects due to lack of liquidity and stringent COVID restrictions. read more

Other data from the Bureau of Statistics on Friday showed August’s 13th straight month of decline in property sales, which did not support sentiment.

Property sales by floor area fell 22.58% year-on-year, marking the sixth consecutive month of double-digit declines, according to Reuters calculations based on NBS data. Sales for the January-August period decreased by 23.0% year-on-year.

CSI Real Estate Index after data release (.CSI000952) Shares on the mainland stock market fell 1.73%.Hang Seng Mainland Property Index (.HSMPI) In Hong Kong, sales decreased by 0.73%.

unfinished project

Month-over-month price declines spread to more cities in August, with unfinished projects across China increasingly weighing on sentiment for the long term.

Of the 70 cities surveyed by NBS, 40 in July and 50 in August reported price drops.

House prices fell by 0.2% and 0.4% in tier 2 and tier 3 cities, respectively, according to official data.

“It will take some time before the pool of unfinished property construction projects is completed with support from local government developers and Chinese households are once again considering large-scale property investments. I guess,” said Robert Carnell. Ing.

“As a result, these figures are likely to remain a stain on the economic picture for quite some time.”

Property investment and new construction starts by developers also fell in August, suggesting that many property firms are focusing more on paying down debt than launching new projects.

Investment fell 13.8% year-on-year in August after falling 12.3% in July. The period from January to August decreased by 7.4%.

New construction starts, as measured by floor area, plummeted 45.7% year-on-year after a 45.4% drop in July, the biggest drop in nearly a decade.

The renminbi, also known as the Chinese yuan, dipped below $7 on Friday, which only exacerbates the developer’s predicament.

Chinese real estate companies are the country’s largest issuers of dollar-denominated bonds, and the depreciation of the yuan will only make refinancing their debt more expensive.

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Reported by Liangping Gao and Ryan Woo. Edited by Muralikumar Anantharaman and Ana Nicolaci da Costa

Our criteria: Thomson Reuters Trust Principles.

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