BEIJING (Reuters) -China’s property sector contracted further in August, with falls in home prices, investment and sales, official data showed on Friday, as a mortgage boycott, widespread COVID lockdowns and a weak economy clouded confidence in the sector.
Once a key driver of economic growth, China’s property market has lurched from crisis to crisis since the summer of 2020 after regulators stepped in to cut excess leverage at developers. The property market woes have weighed on the world’s second-largest economy, which narrowly escaped a contraction in the second quarter.
New home prices fell 0.3% month-on-month in August, the fastest pace since November 2021, according to Reuters calculations based on National Bureau of Statistics (NBS) data. Prices were unchanged in July.
New home prices fell 1.3% year-on-year in August, the fastest pace since August 2015, extending a 0.9% decline in July.
Property investment fell 7.4% year-on-year in January-August, the fastest pace since January-March 2020, extending a 6.4% decline in January-July, according to a NBS separate statement on Friday.
Property sales by floor area fell 23.0% from a year earlier in the first eight months of the year, after a 23.1% slump in the first seven months, reflecting further fragile demand.
Confidence has also been dampened by a mortgage boycott across the country since late June as developers stopped building presold housing projects due to strapped liquidity and strict COVID restrictions.
As of Tuesday, 51 cities, accounting for 26.1% of China’s gross domestic product (GDP), were implementing full or partial lockdowns or some kind of district-based control measures, said Nomura in a research note.
Authorities have taken steps to prop up the sector, including relaxations on home purchases, smaller down payments, cuts in mortgage interest rates, and a bigger reduction in the selling price of homes.
Woes in China’s residential property market are expected to deepen this year, with economists now expecting home prices to fall in 2022 and betting on a faster drop in property sales than previously forecast, a Reuters poll showed recently.
(Reporting by Liangping Gao and Ryan Woo; Editing by Muralikumar Anantharaman and Ana Nicolaci da Costa)
