China's new home prices extend declines, defying broader recovery
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[October 19, 2023] By
Liangping Gao and Ryan Woo
BEIJING (Reuters) -China's new home prices fell for the third straight
month in September, official data showed on Thursday, dashing hopes of a
turnaround in demand during a traditionally peak home buying period
despite efforts to revive the crisis-hit property sector.
New home prices fell 0.2% month-on-month but narrowed from a 0.3% drop
in August, according to Reuters calculations based on National Bureau of
Statistics (NBS) data. Prices were down 0.1% from a year earlier,
matching August's decline.
The home prices data comes a day after separate figures showed property
sales and investment extended double-digit declines, a sign the world's
second-biggest economy is not out of the woods yet despite upbeat
headline gross domestic product data.
China has quickened the pace of policy stimulus in recent weeks, by
relaxing borrowing rules and lifting home-purchasing curbs in some
cities, in attempts to boost battered buyer sentiment, which analysts
say has started to show signs of stabilization.
"Whether the property market fully recovers depends on the performance
in the fourth quarter (Q4), and new home prices may fall slightly for
the full year of 2023," said Ma Hong, senior analyst at Zhixin
Investment Research Institute.
September and October are traditionally peak months for new-home sales
in China, with developers offering promotions and releasing new
properties on to the market.
Of the 70 cities in the home price data, 54 reported declines in prices
last month, up from 52 in August.
New home prices in tier-three cities fell 0.3% month-on-month after a
0.4% drop in August.
"The property markets in lower-tier cities still face strong headwinds
from weaker growth fundamentals than top-tier cities, including net
population outflows and potential oversupply problems," said Goldman
Sachs analysts.
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A man walks at a construction site near residential buildings in
Beijing, China April 14, 2022. Picture taken April 14, 2022.
REUTERS/Tingshu Wang/File Photo
China's property sector, once a key engine of economic growth, has
been squeezed by a regulatory crackdown since 2020 as authorities
curbed excessive debt, which tightened liquidity and raised default
risks for developers.
Still, support policies boosted housing demand in some major cities
with new home prices up on month in Beijing and Shanghai. However,
demand remained lukewarm in smaller cities struggling with excess
supply while nationwide the property sector remains in a deep slump.
New home prices in Shenzhen and Guangzhou extended declines in
September. Ma attributed the fall to the fact that Guangdong
province is home to many private developers with liquidity problems.
"There is no need for more supportive policies for the sector
recovery, and the most urgent issue that needs to be resolved is the
effective disposal of the debts of some private developers," said
Ma.
Investors are closely watching Country Garden, China's biggest
private developer, which is also headquartered in Guangdong, for
signs of what may come next for the sector.
The grace period for a $15 million coupon payment on a bond issued
by the company expired on Wednesday with no word yet of payment.
(Reporting by Liangping Gao, Ella Cao and Ryan Woo. Editing by Sam
Holmes)
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