China’s new home prices fall for second month on weak sentiment

BEIJING, Oct 24 (Reuters) – China’s September new dwelling costs fell for the second straight month as mortgage boycotts, a heightened debt disaster and COVID-19 curbs weighed on homebuyers’ sentiment.

China’s property sector has been beset by a number of headwinds after regulators clamped down on extreme borrowing since mid-2020. Issues have deepened from the liquidity crunch, with debt-ridden builders defaulting on bond funds, homebuyers halting their mortgage funds on stalled initiatives and pandemic restrictions persevering with to undermine demand.

Beijing has rolled out a flurry of insurance policies to revive the sector, together with enjoyable mortgage charges and refunding particular person earnings tax for some homebuyers. However demand has but to get well, with a decline in developer gross sales and funding underscoring the awful outlook.

“China’s property market stays sluggish and is anticipated to stabilise within the fourth quarter, however nonetheless hovering at a low degree,” stated Zhang Dawei, chief analyst at property company Centaline.

The property market has been affected by falling confidence over the financial outlook, particularly as cash-strapped builders halted building on many initiatives, Zhang stated.

New dwelling costs in September fell 0.2% month-on-month after a 0.3% drop in August, in response to Reuters calculations primarily based on Nationwide Bureau of Statistics (NBS) knowledge launched on Monday.

On a year-on-year foundation, new dwelling costs in September declined on the quickest tempo since August 2015, falling 1.5% after a 1.3% decline in August.

WEAK CITIES

Out of the 70 cities surveyed by NBS, 54 reported value falls in September, up from 50 cities in August.

In month-to-month phrases, new dwelling costs in tier-two cities fell 0.2% and declined 0.4% in tier-three cities.

“The property markets in lower-tier cities nonetheless face sturdy headwinds from weaker progress fundamentals than giant cities, together with web inhabitants outflows and potential oversupply issues,” stated Goldman Sachs in a analysis observe.

Separate knowledge from the statistics bureau additionally confirmed the sector remained in a protracted droop, with builders scuffling with weak demand.

Property gross sales by flooring space in September declined for a 14th consecutive month in September, down 16.15% on yr from a droop of twenty-two.58% in August, in response to Reuters calculations primarily based on official knowledge.

Property funding fell 12.1% from a yr earlier, barely narrowing from a 13.8% fall in August.

POLICY

China wrapped up its twice-a-decade management reshuffle on Sunday, with Xi Jinping securing a 3rd time period as common secretary of the ruling Communist Social gathering and packing the brand new Politburo Standing Committee with allies.

China reiterated its “housing is for residing, however not for hypothesis” within the full work report of the Communist Social gathering Congress.

Analysts stated they didn’t count on massive coverage modifications after the Congress.

“There may be little room to present extra assist to actual property property builders as doing so will threat the credibility of presidency reform (for property builders, which means the deleveraging reform),” stated Iris Pang, chief economist for Better China at ING.

“There may very well be some focused coverage to assist mortgagors that purchased uncompleted initiatives however they shouldn’t be thought-about preferential insurance policies for actual property builders.”

Further reporting by Ella Cao; Modifying by Jacqueline Wong

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