A decline in Chinese new-home prices accelerated in May, despite efforts by local governments and banks to increase support for a real-estate sector that has been plagued by developer defaults and weak home-buyer demand.
Data released on Thursday by China’s National Bureau of Statistics showed that average new-home prices in 70 major Chinese cities declined 0.79% in May from a year earlier. That was worse than a 0.11% year-over-year pullback in April, which was the first month in which home prices had fallen by this measure in more than six years.
Just 23 of the 70 Chinese cities tracked by the government reported yearly growth in average new-home prices, down from 30 cities in April.
Compared with the previous month, average new-home prices fell 0.17% in May, marking a ninth consecutive monthly decline, according to Wall Street Journal calculations based on statistics bureau data.
A day earlier, official data showed home sales by volume, a key indicator of buyer demand, falling 34.5% in the first five months of 2022 when compared with the same period a year earlier.
Private-sector indicators have painted an even gloomier picture of China’s property market since last summer, when the giant developer
China Evergrande Group’s
liquidity problems began spooking global investors and Chinese home buyers. A campaign by Chinese regulators to cut developers’ debt levels caused banks and investors to back away, causing Evergrande and more than a dozen other real-estate developers to default on their dollar debt in the ensuing months.
In May, sales at the 100 largest property developers dropped 59.4% from a year earlier, according to data compiled by property consulting firm China Real Estate Information Corp. It was the 11th consecutive month of falling sales volumes, the firm’s data showed.
Country Garden Holdings Co.
, one of China’s largest developers, reported a 50% drop in contracted sales last month from a year earlier, while another big developer, Sunac China, experienced an 82% year-over-year slump in May sales after defaulting on a dollar bond recently. These and other developers have also reported much bigger declines in selling prices than China’s official new-home price data shows.
The market is still going downward, and housing demand in most cities is contracting severely as the economy is slowing and the job market doesn’t look promising, said Lin Bo, vice-research director at CRIC. “As property prices are still dropping, home buyers would rather wait and see,” he said.
Covid-19 outbreaks in China and extended lockdowns in many cities this year have also damped consumer confidence. If there was demand, “you would have seen an explosive rebound afterwards,” Mr. Lin said, noting that hasn’t happened so far.
“The real-estate market has been in a downward spiral since the beginning of the year,”
Fu Linghui,
a spokesman for China’s statistics bureau, said in a briefing Wednesday. He added, however, that recent internal research had shown signs of a recovery that he said would become more evident in the second half of the year as stimulus measures to reverse the damage begin to take hold.
In recent months, more than a hundred Chinese cities have taken easing steps, including lowering down-payment requirements, lifting curbs on home purchases and offering subsidies to boost home-buying demand.
On the monetary policy front, China’s central bank last month cut interest rates for first-time home buyers, while slashing its benchmark reference rate for mortgages by 0.15 percentage point.
Despite the efforts at reversing some of the damage,
Goldman Sachs
economists told clients in a note Thursday that they expect the property sector slowdown to wipe 1.4 percentage points from this year’s growth in the headline gross domestic product figure.
Beijing has said it is aiming to expand GDP this year by about 5.5% from a year earlier, a target that many economists now deem impossible as widespread Covid-19 containment measures have shut down Shanghai and other parts of the country for weeks.
Sheng Guoqing, an analyst at the statistics bureau, noted that while monthly home prices have been sliding for nine straight months, the pace eased somewhat in May. More of the 70 cities tracked by the statistics bureau also reported average home-price increases on a monthly basis—25 cities compared with April’s 18 cities.
Home prices in first-tier cities, which include economic dynamos Beijing, Shanghai, Shenzhen and Guangzhou, rose 0.4% in May from the previous month, accelerating from a 0.2% month-over-month increase in April, Mr. Sheng said. Prices in second-tier and third-tier cities either stayed flat or declined more slowly on a monthly basis, he added.
—Bingyan Wang contributed to this article.
Write to Jonathan Cheng at jonathan.cheng@wsj.com and Cao Li at li.cao@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
A decline in Chinese new-home prices accelerated in May, despite efforts by local governments and banks to increase support for a real-estate sector that has been plagued by developer defaults and weak home-buyer demand.
Data released on Thursday by China’s National Bureau of Statistics showed that average new-home prices in 70 major Chinese cities declined 0.79% in May from a year earlier. That was worse than a 0.11% year-over-year pullback in April, which was the first month in which home prices had fallen by this measure in more than six years.
Just 23 of the 70 Chinese cities tracked by the government reported yearly growth in average new-home prices, down from 30 cities in April.
Compared with the previous month, average new-home prices fell 0.17% in May, marking a ninth consecutive monthly decline, according to Wall Street Journal calculations based on statistics bureau data.
A day earlier, official data showed home sales by volume, a key indicator of buyer demand, falling 34.5% in the first five months of 2022 when compared with the same period a year earlier.
Private-sector indicators have painted an even gloomier picture of China’s property market since last summer, when the giant developer
China Evergrande Group’s
liquidity problems began spooking global investors and Chinese home buyers. A campaign by Chinese regulators to cut developers’ debt levels caused banks and investors to back away, causing Evergrande and more than a dozen other real-estate developers to default on their dollar debt in the ensuing months.
In May, sales at the 100 largest property developers dropped 59.4% from a year earlier, according to data compiled by property consulting firm China Real Estate Information Corp. It was the 11th consecutive month of falling sales volumes, the firm’s data showed.
Country Garden Holdings Co.
, one of China’s largest developers, reported a 50% drop in contracted sales last month from a year earlier, while another big developer, Sunac China, experienced an 82% year-over-year slump in May sales after defaulting on a dollar bond recently. These and other developers have also reported much bigger declines in selling prices than China’s official new-home price data shows.
The market is still going downward, and housing demand in most cities is contracting severely as the economy is slowing and the job market doesn’t look promising, said Lin Bo, vice-research director at CRIC. “As property prices are still dropping, home buyers would rather wait and see,” he said.
Covid-19 outbreaks in China and extended lockdowns in many cities this year have also damped consumer confidence. If there was demand, “you would have seen an explosive rebound afterwards,” Mr. Lin said, noting that hasn’t happened so far.
“The real-estate market has been in a downward spiral since the beginning of the year,”
Fu Linghui,
a spokesman for China’s statistics bureau, said in a briefing Wednesday. He added, however, that recent internal research had shown signs of a recovery that he said would become more evident in the second half of the year as stimulus measures to reverse the damage begin to take hold.
In recent months, more than a hundred Chinese cities have taken easing steps, including lowering down-payment requirements, lifting curbs on home purchases and offering subsidies to boost home-buying demand.
On the monetary policy front, China’s central bank last month cut interest rates for first-time home buyers, while slashing its benchmark reference rate for mortgages by 0.15 percentage point.
Despite the efforts at reversing some of the damage,
Goldman Sachs
economists told clients in a note Thursday that they expect the property sector slowdown to wipe 1.4 percentage points from this year’s growth in the headline gross domestic product figure.
Beijing has said it is aiming to expand GDP this year by about 5.5% from a year earlier, a target that many economists now deem impossible as widespread Covid-19 containment measures have shut down Shanghai and other parts of the country for weeks.
Sheng Guoqing, an analyst at the statistics bureau, noted that while monthly home prices have been sliding for nine straight months, the pace eased somewhat in May. More of the 70 cities tracked by the statistics bureau also reported average home-price increases on a monthly basis—25 cities compared with April’s 18 cities.
Home prices in first-tier cities, which include economic dynamos Beijing, Shanghai, Shenzhen and Guangzhou, rose 0.4% in May from the previous month, accelerating from a 0.2% month-over-month increase in April, Mr. Sheng said. Prices in second-tier and third-tier cities either stayed flat or declined more slowly on a monthly basis, he added.
—Bingyan Wang contributed to this article.
Write to Jonathan Cheng at jonathan.cheng@wsj.com and Cao Li at li.cao@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8