New home prices across major cities in mainland China weakened in May, extending the sequential monthly decline to two years as analysts warned Beijing’s stimulus measures were no longer effective in helping to end the crisis.
In the four first-tier cities, prices declined 0.2 per cent after the market stabilised in April, as Beijing, Shenzhen and Guangzhou reported weaker prices while Shanghai bucked the trend. The markets in second- and third-tier cities were also grim as prices fell by 0.2 per cent and 0.3 per cent, respectively, as 53 of 70 tracked cities suffered declines.
“The decline warrants caution,” said Yan Yuejin, vice-president of E-House China Real Estate Research Institute in Shanghai. It could be an early indicator of the waning impact of policy support measures, he added.
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China has been ramping up support for the housing market to reverse a five-year slump, triggered by the government’s policy in August 2020 to control excessive debt among the weakest developers. While Beijing aimed to prevent systemic risk to the system, the campaign fanned a liquidity crunch and loss of confidence among homebuyers.
Those support measures included a liquidity injection to boost lending capacity, funding lifelines for approved housing developers, interest-rate cuts, easier mortgage financing limits and looser requirements for home ownership.