1st June 2023 – (Beijing) China’s property market is facing more pressure as new home prices fell for the first time in four months in May, according to a private survey by the China Index Academy. The survey of 100 cities showed that new home prices declined 0.01% month-on-month, compared to 0.02% growth in the previous month. The drop in prices comes as home sales by value fell 18.8% from a month earlier, adding to concerns about the property market’s stability following a sharp slump.
The lifting of tough COVID-19 restrictions in December, low mortgage interest rates, and policy support measures provided a boost to the property sector. However, demand remains weak in small cities as consumers are cautious about big-ticket spending amid concerns over incomes and jobs, as the post-pandemic economic recovery loses steam.
The China Index Academy noted that the real estate market is under greater adjustment pressure, and homebuyer sentiment continued to fall in May. Among the 100 cities surveyed, only 29 reported a rise in home prices in monthly terms. Despite the bearish property market data, Nomura noted that it sees no sign of a new round of big easing/stimulus for the property sector yet.
The decline in new home prices and sales is likely to further weigh on China-related assets in the coming weeks. The property market is a crucial part of the Chinese economy, and any significant slowdown could have a spillover effect on other sectors. As such, there is growing concern about the potential impact of the property market’s instability on the overall economy.