New home prices in 70 medium- and large-sized cities in October fell 0.38 percent month-on-month, the sharpest decline since 2015, according to data from the National Bureau of Statistics of China. Home prices also fell 0.3 percent in September.
Thus, house prices in major Chinese cities have fallen for the fourth consecutive month and the sharpest decline in the past eight years.
This development shows that real estate demand in China continues to decline despite market support measures and the real estate crisis in the country has no way out.
Stimulus measures introduced this year have failed to turn around markets and the recovery in the world's second-largest economy will remain muted.
Ma Hong, senior analyst at Zhixin Investment Research, said the most important reason for the price drop is weak demand.
"Customers do not know whether the houses they buy will be delivered on time as promised by the investor," he told Reuters.
Housing prices in China continue to fall sharply (Photo: Bloomberg).
Once an important growth engine, accounting for about 25% of China's economy, the three red lines policy has caused many real estate developers to have liquidity squeezed, increased the risk of default and frozen many projects.
Liu Aihua, a spokesperson for China's National Bureau of Statistics, said the real estate market is still adjusting and transforming, and there will be "turning points" in the economic recovery.
Previously, the real estate market had a recovery period right after China ended its Covid-19 epidemic control measures. However, this recovery was short-lived.
"Homebuyers are hesitant as incomes have fallen sharply and the market outlook is uncertain," Chen Wenjing, research director at real estate firm China Index Holdings, told Bloomberg .
The recent real estate crisis has engulfed almost all the big names in the industry, pushing them into a situation of liquidity shortage and being unable to complete unfinished projects.
Zhang Dawei, an analyst at real estate firm Centaline, said property policies, especially in major cities, needed to be strengthened. "Home prices are expected to continue falling in November and December," he told Reuters .
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