Advertisement
China's new home prices recorded their sharpest fall in nearly a year, dropping 0.4% month-on-month and 2.2% year-on-year, signalling deepening stress in the property sector. The decline has hurt consumer confidence and spending, prompting authorities to consider new stimulus measures such as lower mortgage rates and tax deductions. The sector's prolonged downturn since 2021, coupled with weak developer finances, has slowed economic growth. Among 70 surveyed cities, 63 reported monthly price drops. Despite policy easing and redevelopment efforts, recovery may take over a year. The 15th five-year plan, now under discussion, is expected to prioritise housing stability and long-term economic support.
China's new home prices have fallen at their sharpest rate in almost 11 months, adding pressure on the property sector and slowing overall economic growth. Weakness in the housing market is affecting consumer confidence and household spending, prompting authorities to consider additional measures to support the sector amid global trade challenges. Advertisement
National Bureau of Statistics data shows that new home prices dropped 0.4% month-on-month, after a 0.3% decline in the previous month. Year-on-year, prices fell 2.2%, slightly improving from a 2.5% decline earlier. Economists note that continued drops in property values, particularly in first-tier cities, could reduce perceived wealth among households, limiting their future spending. Hannah Liu, a China economist at Nomura, highlighted that stabilizing or slightly increasing housing prices in these cities could help boost consumption.
September and October are typically peak months for property purchases, as developers launch sales campaigns to attract buyers during national holidays. However, the property market has been in a prolonged downturn since 2021, with many developers failing to repay debts or complete presold homes, which has weakened consumer sentiment. Data also shows that China's overall economic growth slowed in the third quarter, affected by the property slump and U.S. trade tensions. Analysts suggest additional measures such as lowering mortgage rates or expanding personal income tax deductions may be introduced in the final quarter to support confidence. Zhang Dawei, chief analyst at Centaline Property Agency, expects property transaction volumes to drop 10% this year.
Among the 70 cities surveyed, 63 reported monthly declines in home prices, while 61 recorded yearly drops. Secondary home prices fell 3.2% in tier-one cities, 5.0% in tier-two, and 5.7% in tier-three cities. Property investment and sales have also slowed sharply during the first nine months of the year. Once a key driver of economic growth, the property sector has now become a drag on China's economy.
In the past two years, the government has introduced policies to stabilize the sector, including mortgage rate cuts and accelerated urban village redevelopment. Local authorities have also eased home-buying restrictions to encourage consumption. Despite these measures, the market remains weak, and analysts caution that it could take over a year for prices and investment to fully recover. Nomura economists noted that the upcoming five-year development plan will need to address the property market fallout, with an emphasis on sector stability, local stimulus policies like home purchase subsidies, and tax reductions.
The Central Committee of China's ruling Communist Party recently held a closed-door meeting to discuss the country's 15th five-year development plan, expected to outline strategies for stabilizing the housing market and supporting long-term economic growth. Analysts believe the meeting's outcomes could shape both policy measures and market expectations in the coming months.
Source Reuters
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
