BEIJING: China's new home prices fell at the fastest pace in nine years in June, official data showed on Monday, with the battered sector struggling to find a bottom despite government support measures to control oversupply and bolster confidence.
New home prices were down 4.5 per cent from a year earlier, hitting the lowest since June 2015, deeper than a 3.9 per cent slide in May, according to Reuters calculations based on National Bureau of Statistics (NBS) data.
Prices were down 0.7 per cent month-on-month in June after a 0.7 per cent dip in May.
Since 2021, the property market's steep downturn has led to a series of developers defaulting, leaving numerous construction sites idle. This has eroded confidence in the sector, traditionally favoured by Chinese households as a safe haven for their savings.
The property sector which at its peak accounted for a quarter of GDP, remains a major drag on the US$18 trillion economy.
Authorities have rolled out a flurry of support measures, including cutting home buying costs in major cities and allowing local governments to buy some unsold apartments and turn them into affordable housing.
"Recent supports are a step in the right direction but are still dwarfed by the scale of the problem. Real estate's tentacles run deep. When the sector hurts, pain is felt economy-wide," said Harry Murphy Cruise, economist at Moody's Analytics, in a research note.
Official data also showed China's economy grew 4.7 per cent in April-June, its slowest since the first quarter of 2023 and missing a 5.1 per cent analysts' forecast in a Reuters poll.
While some measures such as lifting of home purchase restrictions have helped market sentiment, more stimulus may not bolster falling prices.
"The structure of supply and demand in the property sector has been fundamentally reversed. (The market) does not need to have excessively high expectations of the effects of the policies," said Zhang Dawei, analyst at Centaline Property Agency Ltd.
"It is unlikely that there will be a rise across the board in the sector in the future," Zhang said.
Property investment fell 10.1 per cent in the first half of 2024 from a year earlier, and home sales by floor area fell 19.0 per cent, compared with a 20.3 per cent slump in the first five months of the year, separate NBS figures showed.
Markets will closely scrutinise directives from the Communist Party leadership meeting starting on Monday where key economic issues will be discussed.
Policy advisers believe China could unveil tax and fiscal changes that would funnel more tax revenues to debt-laden local governments to help ease pressure on their finances.
"The remainder of 2024 will be defined by officials' success in arresting the property market's falls and encouraging domestic spending. Both require significant intervention," said Moody's Analytics Murphy Cruise.