China’s New Home Prices Decline as Property Crisis Persists
In February, China’s new home prices fell 4.8% year-on-year. Local government pricing guidance complicates market assessment. Resale home prices also declined in major cities, reflecting an ongoing property crisis. The government has prioritized stabilizing the market with new policies. The real estate sector’s prior economic contribution has diminished due to developer financial troubles post-2021.
In February, China’s new home prices experienced a decline, with a reported decrease of 4.8% year-on-year, slightly less than the 5.0% drop recorded in January. The National Bureau of Statistics (NBS) has revealed that local governments provide developers with informal guidance on pricing, which complicates the assessment of actual market demand. Moreover, NBS data indicates a decline in resale home prices across tier-one, tier-two, and tier-three cities, reflecting a downturn in the real estate market both monthly and annually.
The country’s property crisis has significantly affected its economy over the past few years. In its recent annual work report, the government identified stabilizing the real estate market as a key objective for the year ahead. Policymakers have proposed city-specific policies aimed at modifying home-buying restrictions to unlock potential demand for entry-level homes and improved housing options.
Historically, the real estate sector contributed approximately one-quarter of China’s economy. However, the financial turmoil in 2021, precipitated by a government-led initiative to curtail debt in the industry, left numerous developers facing financial difficulties. This led to insufficient completion of construction, which subsequently caused declines in sales, prices, and consumer confidence.
In summary, China’s real estate market is grappling with significant challenges as new home prices and resale prices continue to decline. The government’s efforts to revitalize the market through targeted policies indicate a commitment to address the crisis. However, the lasting impact of previous economic policies raises concerns about the sector’s recovery and stability moving forward.
Original Source: m.economictimes.com
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