Fresh data point to continued signs of weakness in China's property sector, as price declines for new homes widened in May, suggesting Beijing's housing rescue measures may not be sufficient to engineer a rebound.
New-home prices in 70 major Chinese cities in May fell 0.71% from April, compared with a 0.58% decline recorded for the prior month, according to calculations by The Wall Street Journal based on data from China's National Bureau of Statistics.
Among 70 cities surveyed by the statistics bureau, 68 of them reported a month-over-month price decline in May, up from 64 cities in April.
Meanwhile, new-home prices fell 4.3% in May from a year earlier, accelerating from the 3.51% year-over-year decline in April. There were 67 cities reporting year-over-year price declines, higher than April's 63 cities, according to official data released Monday.
China's property market has been mired in a yearslong slump, emerging as a key drag on the world's second-largest economy. Last month, Beijing announced its boldest property-sector rescue measures yet, though many economists generally believe more needs to be done.
Local governments have been encouraged to buy up unsold properties and convert them into affordable housing for lower-income residents, though economists have warned that the 300 billion yuan ($41.35 billion) worth of liquidity provided by the central bank for the initiative is a far cry from what is needed to clear the huge backlog of housing stock on the market.
Data released Monday also showed drops in China's new-home sales by both value and floor area, albeit at a slower pace.
New home sales by value for the first five months of the year fell 30.5%, compared with the 31.1% drop for the January-to-April period, the statistics bureau said. Meanwhile, new home sales by floor area fell 23.6% during the January-to-May period, the statistics bureau said, compared with the 23.8% decline in the first four months of the year.
Other property indicators also signaled continued weakness. Property investment fell 10.1% in the January-to-May period, widening from a 9.8% drop in the first four months of the year. New construction starts by property developers declined 24.2% during the first five months of 2024, compared with a 24.6% year-over-year fall in the January-to-April period.
"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' economists said in a Monday note.
They also cautioned that such easing measures may only result in an "L-shaped" recovery in coming years, citing persistent property weakness in China's lower-tier cities and private developers.
Earlier this month China's cabinet, known as the State Council, had urged officials to keep rolling out new policies to destock housing inventory and stabilize the market.
Write to Singapore Editors at singaporeeditors@dowjones.com
(END) Dow Jones Newswires
06-17-24 0038ET
