China’s new home prices fell at the fastest pace in 11 months in September, worsening the property sector’s drag on broader economic growth as policymakers struggle to revive the flailing market.
Persistent property market weakness is weighing on consumer confidence and sapping household spending, building the case for policymakers to step up support to shore up growth amid global trade threats.
New home prices fell 0.4 per cent month-on-month, following a 0.3 per cent fall in August, according to calculations by Reuters based on National Bureau of Statistics data released on Monday. Year-on-year, prices fell 2.2 per cent in September versus a 2.5 per cent drop in August.
“If the value of real estate, especially in first-tier cities, continues to shrink, people will feel they have less money to spend and will expect even less in the future,” said Hanna Liu, China economist at Nomura.
“We think it’s possible to reintroduce measures to stabilise, or even slightly increase, housing prices in first-tier cities, as this would be the most helpful means for boosting consumption,” said Liu.
Big ideas as needed to revive market
September and October are traditionally the peak season for property buying as developers launch sales campaigns to attract consumers during national holidays.
But a prolonged property downturn since 2021, marked by many developers failing to repay debt and complete presold homes, has soured consumer sentiment.
Separate data released on Monday showed China’s headline economic growth slowed in the third quarter, hurt by the property slump and a US trade war.
More support for demand, such as lowering mortgage rates and expanding the scope of personal income tax deductions, may be introduced in the fourth-quarter to bolster confidence, according to Zhang Dawei, chief analyst at Centaline Property Agency.
Zhang expects property transaction volumes to drop 10 per cent this year.
Of the 70 cities surveyed by the NBS, 63 reported month-on-month declines in home prices, and 61 recorded year-on-year falls.
Secondary home prices slid 3.2 per cent year-on-year in tier-one cities, 5.0 per cent in tier-two, and 5.7 per cent in tier-three. Separate data shows faster falls in property investment and sales in January–September.
Once a key driver of economic growth in China, the property sector has turned into a significant drag.
China has in the past two years repeatedly pledged to stabilise the real estate market and rolled out numerous policies, including mortgage rate cuts and a campaign to accelerate urban village redevelopment.
Local authorities have also eased curbs for buying homes to encourage consumption.
But the market remains weak and analysts warn it could take a year or more for prices and investment to recover.
Nomura analysts said in a report last week that the government would need to “more seriously address the fallout from the property market collapse” in its new five-year plan for 2026 to 2030.
“The tone set by the meeting for the property market will still prioritise sector stability, while encouraging local stimulus policies such as home purchase subsidies and tax reductions,” said Jeff Zhang, property equity analyst at Morningstar.
The elite Central Committee of China’s ruling Communist Party will hold a closed-door meeting from Monday to Thursday to discuss, among other things, the country’s 15th five-year development plan.