BEIJING: China's new home prices fell at their fastest pace in nine years in July, as a slew of support policies failed to stabilise prices and restore confidence in the struggling property sector.
The prolonged housing market slump has weighed heavily on the world's second-largest economy and its consumers, with analysts saying Beijing's 5.0 per cent GDP target for 2024 may be too ambitious even as other economic gauges have steadied.
New home prices fell 4.9 per cent from a year earlier - the sharpest drop since June 2015 and deeper than a 4.5 per cent slide in June, Reuters calculations based on National Bureau of Statistics (NBS) data showed. Earlier, Reuters also reported home prices fell 5.0 per cent due to an automated rounding off of figures.
"It is increasingly looking like the property market will continue to need more policy support to establish a bottom," analysts at ING said in a note.
Beijing has been intensifying efforts to support the sector, which at its peak accounted for a quarter of the economy, including reducing mortgage rates and lowering home buying costs.
Policies play a certain role in lifting the market, but the external downturn has limited the effects of these policies, said Song Hongwei, research director of Tongce Research Institute, a real estate research company.
In monthly terms, new home prices were down for the 13th straight month, falling 0.7 per cent, and matching the pace of decline in June.
Among 70 cities surveyed by NBS, only two - Shanghai and Xian - reported a rise in new home prices in monthly terms, and only Shanghai registered a price rise in the resale home market.
In late July, China's top decision-making body, the Politburo, reiterated the country's commitment to supporting the completion of unfinished projects and turning unsold apartments into affordable housing.
In separate data on Thursday, property sales by floor area in January-July fell 18.6 per cent from a year earlier, compared with a 19.0 per cent slump in January-June.
A quarterly survey released last week by China's central bank showed that 23.2 per cent of residents believed that house prices would fall in the third quarter, a record high since data became available in 2013.
Analysts say the real estate market needs targeted and strong support policies.
"We continue to expect more housing easing measures in coming months, including more relaxation of home purchase restrictions in top-tier cities and further reduction in mortgage interest rates, among others," Goldman Sachs said in a research note.
"However, considering persistent property weakness related to lower-tier cities and private developers, such easing measures will only lead to an 'L-shaped' recovery in the sector in coming years."