China’s Property Market Slumps Again Despite Policy Support

In August, the number of cities with declining prices of existing homes hit a record high in the past nine years.

BEIJING,September 15 (TMTPost) -- The nation-wide property market was still slowing down in August, and the number of cities with declining prices of second-hand homes hit a record high in the past nine years, according to the latest data released by the National Bureau of Statistics (NBS) on Friday.

In August, prices of newly built commercial residential buildings fell across the board, with sales prices in first- and second-tier cities fell 0.2% compared to July and the rate of decline in third-tier cities widened by 0.1 percentage points to 0.4% month-on-month.

The prices of new commercial residences are usually affected by factors such as data latency and price restrictions, while the data of the second-hand residential market shows more about the real market. The decline in prices of second-hand homes was even greater, with sales prices in first-tier cities dropping 0.2% from July, narrowing by 0.6 percentage points compared to the figure in July. The sale prices in second-tier and third-tier cities fell by 0.5% and 0.4% month over month, respectively, about the same month-on-month declining rate.

The number of cities with falling home prices continued to increase. Data from 70 cities surveyed by NBS showed that the number of cities where the prices of newly-built commercial residential buildings rose in August was 27, a decrease of 3 compared to July. The number of cities with falling prices increased from 49 to 52 and there were as many as 66 cities where the price of second-hand homes fell, with only Beijing, Dali, and Mudanjiang being the exceptions.  

According to data from the NBS, the number of cities where prices of second-hand homes fell in August hit a record high in nine years, so did the number of cities where prices of newly built commercial housing fell.

Prices in the nation-wide property market fell, as did the volume. Data from the NBS showed that in the first eight months, the total sold floor area of commercial properties nationwide amounted to about 740 million square meters, a year-on-year decline of 7.1%, 0.6 percentage point more than that in the first seven months.

In response, the central and local governments have introduced policies and measures to shore up the market at the end of August, including treating a mortgage for second-home buyers as the first one as long as their first mortgage is paid off, lowering the percentage of the down payment, slashing the mortgage rate, and easing the restriction on purchases. But overall, the measures are not as strong as the policies in 2014.

Li Yuja, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Urban Planning and Design, said that in the first half of September, the volume of second-hand housing transactions in first-tier cities rose significantly compared to that in August. It is expected that new policies will be introduced at the end of September, such as uniform reduction of the proportion of down payment for first and second home mortgages.

In the press conference held by the State Council Information Office of China on Friday, Fu Linghui, the spokesman of NBS and Director of the Department of Comprehensive Statistics Division, said that the optimization measures introduced in different regions can help boost market confidence and improve the business expectations of real estate enterprises.

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