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China's housing market recorded its sharpest monthly decline in new home prices in about a year, reflecting ongoing weakness in demand and persistent pressure on the wider property sector. Official figures released earlier this week indicated that prices continued to fall both month-on-month and year-on-year, underscoring the challenges the government faces as it aims to stabilise the market without resorting to large-scale stimulus. Industry analysts pointed to fragile buyer sentiment, oversupply in smaller cities and a subdued resale market as key factors weighing on performance, despite policy support introduced in the past year.
China's new home prices registered their fastest monthly decline in roughly a year earlier this week, according to official data, signalling continued fragility in a property sector already strained by weak demand and lingering financial pressures. Reuters' assessment of the figures from the National Bureau of Statistics showed that prices slipped by 0.5% compared with the previous month, steeper than the 0.4% decrease recorded in the preceding month. Advertisement
On an annual basis, prices fell by 2.2%, matching the pace of decline seen in the past month. The sustained downturn during September and October, typically regarded as a peak sales period, has emphasised the scale of the challenges facing policymakers as they attempt to steady the sector in the face of broader economic headwinds.
The market has been struggling since the upheaval that began in 2021, with developers grappling with subdued sales and restricted liquidity. Analysts noted that stabilising the sector could help support household consumption and reduce the economy's reliance on state-driven infrastructure spending and exports, the latter affected by trade measures introduced under U.S. President Donald Trump.
Although authorities rolled out notable support measures during the latter part of 2024, they have refrained from introducing broader stimulus this year, instead reaffirming previous commitments. Zhang Dawei of Centaline commented that the market continues to face structural challenges, including declining populations in smaller cities, an abundance of resale listings and persistently low buyer confidence. He suggested that further easing of mortgage rules would be essential for improving sentiment.
While mortgage costs for certain buyers were reduced in the first half of this year, officials have mainly reiterated their stance on market stabilisation. A survey carried out recently by the China Index Academy across more than 260 cities indicated a noticeable drop in home-buying confidence in smaller urban centres, falling by 2.9 percentage points on a monthly basis.
The resale market remains particularly weak, with price declines recorded both monthly and annually across the 70 surveyed cities. Xu Tianchen, senior economist at the Economist Intelligence Unit, noted that the pace of decline in second-hand home prices was approaching a 'critical threshold.' He added that, if the trend were to continue, government intervention would likely follow, echoing the swift policy responses observed in 2024.
Additional official data revealed ongoing falls in property investment and floor area sold over the past ten months. Meanwhile, policy recommendations for the country's 2026-2030 development plan placed emphasis on 'high-quality' development in the real estate sector, improved housing supply tailored to varied needs, and strengthening systems related to development, financing and sales. Resolving risks across the sector also featured prominently in these recommendations.
China's property market continues to face substantial strain, with both new and resale home prices declining and investor confidence remaining subdued. Despite earlier policy measures, the absence of large-scale stimulus has left the sector reliant on gradual reforms and targeted support. Analysts have highlighted the need for further mortgage easing and stronger efforts to bolster buyer sentiment, particularly in smaller cities. As policymakers outline priorities for the next development phase, the focus on quality growth, risk mitigation and improved housing systems is expected to shape the market's direction in the coming years.
Source - Reuters
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