BEIJING: China‘s new home prices extended declines in August, official data showed on Tuesday, underscoring the persistent drag from the country’s prolonged property downturn.
New home prices fell 0.1% in August, matching the decline in July and June, according to Reuters calculations based on data released by the National Bureau of Statistics.
On an annual basis, prices fell 3.0%, narrowing from a 3.2% drop in July, the slowest pace of decline this year.
The persistent price weakness suggested the real estate market would remain a drag on the economy, constricting domestic consumption and straining local government income, unless policymakers launch strong stimulus to revive the sector.
Price performance was uneven across the country. The biggest cities showed signs of stabilisation while smaller markets continued to struggle.
New home prices in tier-one cities rose 0.1% in August from July, snapping a prior monthly drop, while tier-two and tier-three cities saw declines.
Resale prices in tier-one cities also showed improvement, edging up in August.
The government issued a flurry of measures last month to guide developers away from a presale model that triggered homebuyer protests when construction on the homes they paid for stalled after the downturn hit. Financial regulators also extended the maximum term for mortgage loans to 40 years from 30 years.
The measures seek to shore up homebuyer confidence and establish a less risky funding model for real estate development in the long run, but analysts said they were unlikely to tangibly improve housing demand in the short term.
Broader indicators showed little sign of a turnaround, with property sales, investment, and new construction starts all tumbling in the first eight months of the year, according to separate data.
The property market’s chronic weakness contributed to a broader slowdown, with growth slowing to 4.3% in the second quarter. Official data on Tuesday indicated that the world’s second-largest economy would continue to rely on external demand to offset soft domestic consumption and an investment downturn.
