China’s new home prices fell at the fastest pace in more than nine years in August, official data showed over the weekend, as central government measures continue to fall short of providing stability for the collapsing property sector.
If anything, August saw China’s imploding property market continue to drag the economy deeper into a black hole of President Xi Jinping’s own making.
Deeply indebted developers, incomplete apartments, and declining buyer confidence are straining the financial system and undermining household confidence and spending.
This led to an unwanted new record in August – the fastest fall in new home prices in more than nine years.
The 5.3% fall in the year to August was the fastest pace since May 2015, compared with a 4.9% drop in July, according to National Bureau of Statistics data.
In monthly terms, new home prices fell for the fourteenth straight month, down 0.7%, matching July’s decline.
ING Bank economists said August’s annual fall in new home prices was the steepest monthly decline of this cycle, while the decline in secondary market prices was the steepest since May.
Compared to the peak of the cycle, new home prices are now down 8.3%, while secondary (for ‘used’ houses) market prices are down 14.6%.
The official data showed that property investment fell 10.2% and home sales slumped 18% in the first eight months of this year compared to the same period in 2023.
New home starts were down 22.5% in the eight months to August, while housing completions fell 23.6%.
This month’s data makes it harder to find silver linings and shows that the bottom has not yet been reached.
ING noted, “Market reports for a cut to existing mortgages will help alleviate the pain for households, but we still think that stabilising home prices remains vital for restoring confidence.”