China’s new home prices fall faster in May as property slump persists despite big-city resilience
According to Reuters calculations based on National Bureau of Statistics data, new home prices fell 0.2% in May compared to the previous month; This is up from a 0.1% drop in April.
On an annual basis, prices fell by 3.5% in May, in line with the decline in April.
The price declines have dampened hopes that the property sector, which at its peak accounted for about a quarter of the economy, was nearing bottom after nearly five years of slump. The collapse has not only disrupted some of China’s biggest real estate companies, but also turned a once-major economic growth driver into a drag and suppressed households’ overall appetite for consumption.
However, Centaline Property analyst Zhang Dawei said that the period of sharp decline in house prices across China is now over and the market is not at risk of a rapid decline.
Zhang said the real estate market will continue to be characterized by “elasticity in first-tier cities, differences in second-tier cities and pressure in third-tier cities.”
Official data showed that property sales, investments, new construction and funds raised by developers fell more sharply in January-May. But while prices in major cities showed temporary signs of stabilization, local governments stepped up efforts to boost sales.
Prices in the country’s largest cities rose 0.2% in May, following a 0.1% increase in April, while Shanghai, Shenzhen and Guangzhou recorded increases. Prices in smaller cities in the third tier continued their decline in May.
House prices are expected to fall at a slower pace this year than forecast in the March survey and rise in 2027, according to a Reuters housing market survey conducted May 18-28.
Guangzhou introduced a new home buying incentive in late April, offering subsidies to residents who upgrade their homes by buying a new one and selling the old one, while also encouraging state-owned firms to buy second-hand homes.
