JAKARTA: The property crisis in China has not yet ended. Currently, house prices in the country are continuing their downward trend, even slightly faster in August 2024, the effect of the fading of the latest plans regarding rescue from the property crisis.
China’s National Bureau of Statistics in its data, Saturday, September 14 2024, reported that new house prices in 70 cities in China, excluding state-subsidized housing, fell by 0.73% from July 2024, following a decline of 0.65% a month earlier.
“The value of used homes fell 0.95%, compared to a decline of 0.8% a month earlier,” the report said, citing Bloomberg, Sunday, September 15 2024.
These data highlight China’s efforts to overcome the property crisis at a time when deflationary pressures are adding to the gloomy economy. In fact, the Beijing government’s efforts to spur domestic demand have done little to help the housing market recover, jeopardizing the government’s growth targets and prompting economists to call for additional stimulus.
The prolonged decline in property values has made home buyers reluctant to spend money. Instead of buying homes, buyers are waiting for further price drops.
Research Director at China Index Holdings, Chen Wenjing, said only a few large cities were likely to see an increase in home buying activity.
“There is still great pressure for new house prices to continue to fall,” said Chen Wenjing.
Policy makers have taken steps to boost demand for home buyers this year. These steps include reducing Public Housing Credit borrowing costs and easing purchase restrictions. However, signs of sales recovery in June 2024 proved short-lived as property buyers anticipated new home prices would fall further.
Beijing’s campaign to buy up unsold homes to reduce oversupply has seen slow implementation, largely driven by economic plans that are unappealing to local governments.
Head of China Property Research at CGS International Securities Hong Kong, Raymond Cheng, said that home sales remained weaker than expected.
“If this problem is not resolved, property prices and transaction volume contraction will continue,” he said.
Meanwhile, shares of Chinese developers have slumped further into a bear market. Bloomberg Intelligence shows a decline of more than 40% from its highest point in mid-May 2024. To Bloomberg, a source familiar with this matter said that China is ready to cut interest rates on outstanding public housing loans worth more than US$5 trillion, as early as this month , as the government accelerates steps to spur consumption.
However, Raymond Cheng believes that the impact of this policy will not have a big impact on the property market even though it can help household income and consumption. –ASIATODAY.ID
