According to official data, in May, the rate of decline in China's new home prices reached its fastest pace in nine and a half years. Despite government efforts to control oversupply and support debt-laden developers, the real estate industry is still struggling to stabilize.
Reuters calculations based on data from the National Bureau of Statistics show that new home prices fell by 0.7% month-on-month in May. This marks the eleventh consecutive month of decline and the largest drop since October 2014.
On an annual basis, new home prices fell by 3.9% compared to a 3.1% drop in April.
Since mid-2021, China's heavily indebted real estate sector has experienced multiple crises, including developer defaults and halted presale projects. Once a key engine of China's economic growth, the real estate sector has been severely impacted.
Authorities have taken various measures to support the crisis-stricken real estate industry, including providing 300 billion yuan (approximately $41.35 billion) to clear a large inventory of houses, reducing down payments, and easing mortgage regulations.
However, analysts believe these measures have had limited success in absorbing the large housing inventory. Easing home purchase restrictions in major cities might further dampen buying sentiment in smaller cities.
According to the National Bureau of Statistics' survey of 70 cities, new home prices fell in nearly all cities last month.
"The latest policies have boosted the activity in the second-hand housing market in major cities, but liquidity issues for real estate companies have not been alleviated, and the confidence crisis in the new home market remains unresolved," said Xu Tiancheng, a senior economist at the Economist Intelligence Unit.
