Key Takeaways
- New home prices in China fell 0.1% month-on-month in June, down from May's 0.2% decline.
- Annual price decrease eased to 3.3% from 3.5% in May.
- Economic growth slowed to 4.3% in the second quarter, missing analysts' expectations.
China’s new home prices continued their downward trend but at a slower pace in June, according to official data released by the National Bureau of Statistics. New home prices dropped 0.1% month-on-month compared to May's 0.2% decline, while on an annual basis, they fell 3.3%, easing from a 3.5% decrease in May.
The housing market slump, now entering its fifth year, has been affecting household consumption and exacerbating the economy’s imbalance between strong industrial supply and weak domestic demand. Economic growth slowed sharply to 4.3% in the second quarter of this year, missing analysts' expectations, highlighting the ongoing challenges faced by China's economy.
While some economists suggested that the housing market might be close to finding a bottom, others warned that stronger policy support was necessary due to subdued consumer confidence. Home price data for the year showed modest improvements in both new and resale markets in China’s top-tier cities, but developers in smaller cities continued to struggle with weak sales despite government efforts to reduce housing inventory.
In June, new and existing home prices in tier-one cities rose 0.1% and 0.3% month-on-month respectively, while prices in both markets in tier-two and tier-three cities showed no month-on-month growth. On an annual basis, prices of both new and existing homes continued to fall across all city tiers, though declines narrowed in tier-one cities.
Local governments have been offering incentives for home sales over the past few months, but the central government has not launched nationwide major support policies for the housing market as an export boom reduced the urgency for additional stimulus. Property sales, investment, and new construction starts declined at a faster pace in the first half of the year according to official data.
In June, Qiushi, an official publication of the Chinese Communist Party, called for repairing household balance sheets and stabilising the real estate market to prevent the negative spiral of falling asset prices on consumer confidence. This underscores the government's ongoing efforts to address the housing market issues while balancing economic growth.
