China’s property slump continues as October prices fall

Prices in 100 Chinese cities drop for fourth straight month amid strict COVID curbs.

China property
China's property market continued to shrink in October amid strict COVID-19 restrictions [File: David Gray/Reuters]

China’s property market continued its slump in October, with private data showing home prices and sales falling, suggesting lacklustre sentiment and a bleak outlook amid strict COVID curbs, which hit consumer confidence.

China’s property sector, once a pillar of growth, has slowed sharply in the past year as a result of a government clampdown on excessive borrowing by developers, and a COVID-19-induced economic slump.

Prices in 100 cities dropped for the fourth straight month in October, falling 0.01 percent month-on-month after a decline of 0.02 percent in September, according to a survey on Tuesday by China Index Academy (CIA), one of the country’s largest independent real estate research firms.

Property sales by floor area in 100 cities fell about 20 percent year-on-year in October, according to a separate statement by the academy.

Analyst Chen Wenjing at the research firm said property recovery depends on COVID containment measures and the strength of policies.

Any rebound in the real estate market is expected to be delayed if the country sticks with strict COVID restrictions to quell the repeated coronavirus outbreaks, Chen said. Such curbs are expected to stay in place for some time after the Communist Party Congress last month.

Despite more than 230 stimulus policies introduced by 160 local governments in September and October, including subsidies, easing of purchase restrictions and decreasing down payment requirements, the property slump has widened from small cities with a net outflow of population to major cities.

Last month, new home prices in Shanghai and Shenzhen fell 0.05 percent and 0.32 percent in monthly terms, respectively.

Home sales by floor area in Shanghai and Guangzhou fell 35 percent and 26 percent in annual terms, respectively.

“Wait-and-see sentiment in homebuyers currently remains strong, with COVID flare-ups in many areas further dragging down the pace of market recovery and the previous policies have yet to take effect significantly,” Chen said.

Source: Reuters