China’s property sector is grappling with a worsening slump, adding pressure to the country’s economy. In August, new home prices experienced their fastest decline in 10 months, dropping by 0.3% month-on-month, following a 0.2% decline in July. On a year-on-year basis, prices were down by 0.1%. This decline comes despite recent efforts to boost home buying sentiment through policy measures, including eased borrowing rules and relaxed home purchasing restrictions in select cities.
Additionally, property investment continued to decline for the 18th consecutive month, falling by 19.1% year-on-year in August. Home sales also saw a decline for the 26th consecutive month. While major cities like Beijing saw a slight increase in new home sales due to recent policies, concerns remain about the sustainability of this growth, especially in smaller cities.
China’s broader economy is showing signs of stabilization, with growth in industrial output and retail sales. However, the property sector remains a significant concern, with major Chinese developers struggling to avoid default. Analysts believe that more aggressive property easing measures might be necessary to drive a genuine recovery. Moody’s recently downgraded China’s property sector outlook to negative, citing economic growth challenges that could dampen sales despite government support.
The property crisis in China is viewed as a major hurdle to achieving a sustainable economic recovery, with increasing risks of default among private developers posing a threat to the country’s financial and economic stability.
Disclaimer: The information provided is based on analysis and does not constitute endorsement or political bias.