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China new home prices see sharpest decline in over seven years
Business and Economy

China new home prices see sharpest decline in over seven years

by  AFP 2 min read
China's property market has come under intense pressure in recent years
China's property market has come under intense pressure in recent years. Photo: STR / AFP
Source: AFP

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Prices of new homes in China saw their sharpest decline for seven years in October, data showed Wednesday, as the real estate sector was battered by a debt crisis and a slowing economy.

Property market has long served as a motor for growth in China, on the backs of rising standards of living and high demand in a country where home ownership is seen as a prerequisite for marriage.

But uncertainties linked to Covid-19, which have cooled demand and weighed on household income, are hitting buyers, at a time when several major real estate groups in China are in financial difficulty.

The price of new homes contracted 1.6 percent year-on-year, their sharpest decline since August 2015, analysis of figures from Beijing's National Bureau of Statistics (NBS) showed.

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Real estate prices fell in 58 cities, according to the NBS, which aggregates the average price in 70 cities across China.

Prices in the mega-cities of Beijing and Shanghai bucked the trend.

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The figures come after China's banking regulator unveiled sweeping measures to rescue the struggling property sector last week.

Those included credit support for debt-laden housing developers, financial support to ensure the completion and handover of projects to homeowners, and assistance for deferred-payment loans for buyers.

Friday's measures emphasised "guaranteeing the handover of buildings", and ordered development banks to provide "special loans" for the purpose, according to a copy of plans circulating online.

Property and construction account for around a quarter of China's gross domestic product, but crippling debts have forced a series of developers to default on loans while others have struggled to raise cash.

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Analysts have raised fears that the crisis could yet spread to the country's financial sector at a time when Beijing's hardline zero-Covid policy has also put a lid on growth.

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Source: AFP

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