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China’s housing market weakened further in August, with about 70% cities seeing new home prices decline from the previous month and 80% cities seeing second-hand home prices drop, according to data released by the National Bureau of Statistics (NBS) on Friday.
Among the country’s 70 major cities, 50 cities saw new home prices decline in August from the month before, compared to 40 in the previous month, and 56 cities saw second-hand home price decline on month, compared to 51 in July, said the NBS.
New home prices in the four tier-one cities – Beijing, Shanghai, Guangzhou and Shenzhen – grew by 0.1% in August from the prior month, slowing by 0.2 percentage points from July, and second-hand home prices in the cities remained unchanged from the month before, compared to 0.2% gain in July, according to the data.
New home prices in tier-two cities dropped 0.2% in August from one month earlier, compared to no change in July, and second-hand home prices fell 0.3%, compared to 0.2% drop in July, showed the data.
New home and second-hand home prices in smaller tier-three cities fell by 0.4% and 0.5% in August, respectively, compared to 0.3% drop in July, said the NBS.
According to estimates by Shanghai-based E-House China R&D Institute based on NBS data, average new home and second-hand home prices in the 70 major cities declined by 0.3% and 0.4%, respectively, in August from the previous month, both expanding by 0.2 percentage points from July.
The housing market recovery seen in June lost momentum in July as the nationwide home mortgage boycott dampened market confidence, and in August, the risks remained and it will take more time to rebuild confidence among potential home buyers, said Chen Xiaom, analyst at property service platform Zhuge Zhaofang.
The falling home prices came as property transactions declined in August. According to NBS data, China’s property sales in floor area fell 23% year over year in January – August to 878.9 million square meters, with sold floor area of residential properties sliding 26.8%. The value of property sales reached 8.59 trillion yuan in the first eight months of the year, sliding 27.9% from a year ago, with residential property sales slumping 30.3% from a year earlier, showed the data.
The persistent weakness came despite that local governments have been relaxing property curbs to support the sluggish housing market. According to Centaline Property, as of the end of August, more than 200 cities have relaxed real estate policies by more than 700 times so far this year, surging by 67% from a year earlier and hitting a new record high.
The fundamental reason for the declines in both home prices and transactions and stalled market recovery is a lack of market confidence, said Xu Xiaole, chief analyst at Beike Research Institute.
In addition, slowing economy, Covid-19 flare-ups and extreme weather have also brought more uncertainties to the market and further strengthen market caution, said Xu.
The key to improve market expectation is to further optimize supportive policy in both supply and demand side, he added.
Policies on home purchase and home resale restrictions need to be fully optimized to release home demand, the policy to ensure delivery of stalled property projects need to be implemented fast and flexibly, he said, adding that market expectation won’t improve until there is substantial improvement in resumption of stalled property project.