China home prices fall at slower pace after stimulus boost
BEIJING – China’s home price declines abated for a second month in October, aided by the country’s recent policy support.
New-home prices in 70 cities, excluding state-subsidised housing, dropped 0.51 per cent from September, the slowest pace since March, National Bureau of Statistics figures showed on Nov 15. Values of used homes fell 0.48 per cent, the least in more than a year.
China in the past two months unleashed its strongest package of policies to boost the property market, including cutting borrowing costs on existing mortgages, relaxing buying curbs in big cities and lowering taxes on home purchases.
A years-long property crash has wiped out billions of dollars in household wealth, adding to deflationary pressures.
“Tier-1 cities appear to be bottoming out, but broader property recovery is conditional on an improving economic outlook,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.
Price movements compared with a year earlier showed a more mixed picture. New-home prices fell 6.2 per cent, slightly more than September’s 6.1 per cent drop, the statistics bureau said.
Existing-home prices dropped 8.9 per cent, compared with 9 per cent in September.
In late September, China ramped up efforts to revive growth, with pledges to support fiscal spending and stabilise the beleaguered property sector.
Top leaders vowed to stem the decline of the real estate market, which Morgan Stanley branded as the country’s most determined pledge since the industry downtrend started more than three years ago.
Soon after, the trading hub of Guangzhou became the first tier-1 city to remove all restrictions on buying residential property.
Beijing, Shanghai and Shenzhen allowed more people to purchase residences in suburban areas, while letting some others buy more homes. The central bank also greenlit the refinancing of as much as US$5.3 trillion (S$7.1 trillion) of existing mortgages for millions of families.
In October, regulators pledged to nearly double the loan quota for unfinished residential projects to 4 trillion yuan (S$743 billion). It also planned to renovate one million homes in older, rundown dwellings in large cities.
But these announcements underwhelmed due to a lack of concrete numbers for special bonds to enable local governments to digest some 60 million unsold units.
“The question is how sustainable the housing recovery can be,” Macquarie economists wrote in a recent note. “In the past three years, the sector has had a few false dawns. Each time, the housing market initially rebounded on policy easing, but weakened soon.”