In the latest real estate news, prices of new homes in China experienced their largest decline in nearly a decade last month, indicating that Beijing’s efforts to revive demand have not yet been successful.
According to data from the National Bureau of Statistics (NBS), prices in 70 major cities dropped by 0.7% in May compared to April, the most significant month-on-month decrease since October 2014. Additionally, prices of existing homes in these cities fell by 7.5% year-on-year, the largest decline on record.
While Beijing implemented extensive measures a month ago to address the crisis in the property market, including urging local governments to purchase unsold homes from struggling developers, analysts from Societe Generale noted that it may take some time for these initiatives to have a noticeable impact.
Despite the housing market struggles, there are some positive indicators in other sectors of the Chinese economy. Retail sales increased by 3.7% in May, driven by government incentives for consumer spending. However, industrial output growth slowed to 5.6% from a year ago, and fixed asset investment also fell short of expectations.
On the export front, China saw a 7.6% jump in May, the fastest pace since April 2023, although imports did not meet projections. Analysts from Macquarie highlighted the disparity in growth between exports and the struggling property sector, warning of the ongoing threat of deflation due to weak domestic demand.
As China continues to navigate economic challenges, with producer prices falling for the 20th consecutive month, analysts from HSBC anticipate more policy support to maintain growth in line with this year’s GDP target of around 5%. They also look ahead to the upcoming Third Plenum of the Communist Party, expecting a focus on economic reforms for the future.
