China's home prices to drop faster with worsening sales slumps this year

By Reuters   May 20, 2024 | 06:09 am PT
China's home prices to drop faster with worsening sales slumps this year
An aerial view shows unfinished residential buildings of the Gaotie Wellness City complex in Tongchuan, Shaanxi province, China Sept. 12, 2023. Photo by Reuters
China's home prices will fall at a faster pace this year with worsening slumps in property investment and sales, a Reuters poll showed, a sombre reminder to policymakers as they redouble efforts to revive the crisis-hit property sector.

The poll showed new home prices would fall 5.0% in 2024, versus a 0.9% decline tipped in a previous survey in February. Prices are likely to remain unchanged in 2025, compared with a 0.5% gain forecast in February.

The poll was conducted between May 10 and May 17, and is likely to have only partially taken into consideration Friday's government announcement of support measures to stabilise the property market.

Beijing pledged to facilitate up to 1 trillion yuan ($138 billion) in funding and to ease mortgage rules, with local governments set to buy "some" apartments, which many analysts said marked the government's strongest moves yet to turnaround the sector.

However, questions remain about the latest measures, especially over execution and how the government could help clear trillions of housing inventory.

Since the property market plunged into crisis in 2021, Chinese authorities introduced waves of policy support measures to shore up demand with little effect.

The poll showed property sales likely shrank 10.0% in 2024, steeper than the 5.0% slump forecast in the previous survey, while investment was expected to fall 10.0% from the 6.1% decline tipped in the earlier poll.

"There's still high possibility for more supportive policies aimed at stimulating sales in the short run, which will help ease the decline in property sales," said Xingping Wang, Senior Analyst of Corporates, Fitch Bohua.

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