Recent statistics from the People's Bank of China show that homebuyer enthusiasm has cooled sharply. Despite price cuts and incentives, the world's largest housing market continues to weaken and China's banking sector is being hit by rising loan defaults.
According to the April 2023 financial statistics report released by the People's Bank of China on May 11, mortgages fell by more than 241 billion yuan ($33.8 billion) in April.
Homebuyers look at a real estate project in Guangdong province - Photo: China Daily.
By the end of April, mortgage rates for first-time homebuyers in more than 40 cities had fallen below 4%.
New home prices in 100 cities fell 0.01 percent in May, down from a 0.02 percent gain the previous month, according to survey data from the China Index Institute on Thursday (June 1).
Meanwhile, home sales by value by real estate developers fell 18.8% from a month earlier.
"The real estate market is under greater adjustment pressure and homebuyer sentiment continues to decline in May," the data cited.
Since the Government lifted Covid-19 pandemic containment measures in December 2022, low mortgage interest rates and support policies have helped the real estate sector gain a certain boost.
However, demand remains subdued in smaller cities as consumers remain cautious about spending big on tickets amid concerns about income and jobs as the post-pandemic economic recovery loses momentum.
Of the 100 cities surveyed by the firm, 29 reported monthly home price increases.
According to research published last week, there are still no signs of a major new round of easing/stimulus for the real estate sector, even as the market becomes increasingly worried about the weakness of the housing market and its spillover effects.
This bearish momentum is expected to further impact China-related assets in the coming weeks.
Khanh Vy (According to CNA)
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