China’s housing prices continued to fall in August: the public is not confident that the housing market is difficult to escape | China’s housing market difficulties | New build commercial house prices | New commercial property sales

[NTDBeijingMedi192022]The latest data shows that China’s house prices continued to fall overall in August, with a year-on-year decline of more than 2 percentage points. The “Wall Street Journal” published an analysis that noted that the explosion of debt and unfinished housing problems of Chinese real estate companies have become increasingly evident, which has seriously damaged public confidence in the real estate market, which continues to spread.

According to the latest statistics released by the National Bureau of Statistics of the Communist Party of China on September 16, in August, new commercial housing prices in 50 of China’s 70 large and medium-sized cities fell month on month, and the number of declines increased by 10 since the previous month. The price index of newly built commercial homes in 70 cities fell by an average of 0.3% month-on-month and 2.1% year-on-year. The situation is particularly bad in small cities. Home prices in third tier cities are down 3.7% compared to a year ago.

From the perspective of cities at all levels, only the sales prices of new commercial residential buildings in large first-tier cities increased by 0.1% month-on-month, while second- and third-tier cities fell by 0.2% and 0.4% respectively. Compared to the previous month, the increase narrowed or the decline widened.

The data also showed that the number of new residential property sales in August fell by 21% year on year. Of the 22 developers tracked by Morgan Stanley, property sales fell by 29% in August.

In response to the above data, the “Wall Street Journal” analyzed the current situation of China’s real estate market. The article noted that September and October each year are usually the peak season for real estate sales in China, but this year’s sales are clearly not good. Although the local government has recently been introducing a series of measures to boost the real estate market, including allowing parents to use their own housing savings funds to help their children buy flats, the part is only a relaxation of previous restrictions most of these policies and impact.

The article argues that the root of the malaise in China’s real estate market is that public confidence in the financial health of real estate developers remains fragile. The collapse of a series of developers has raised concerns about whether pre-sale homes will be delivered on time, as well as the risk of unfinished projects from more powerful developers.

In addition, a drop in commodity house prices is another reason for potential buyers to stay on the sidelines; while China’s “no-out” epidemic policy has dragged down residents’ income and employment growth, making sales in the real estate market worse.

The article drew attention to the fact that in order to restore public confidence in the housing market, there is a need to solve the pre-sale problem of unfinished homes. And local government funding has been hurt by the fall in land sales, and relying on them to solve these problems is likely to be impossible.

In the last month, local governments have started to guarantee bonds issued by some of the healthier developers. This will help prevent further contagion of the crisis, but will not rebuild public confidence in the industry as a whole. If the central government fails to propose stronger measures to restore public confidence, the woes of China’s housing market may continue to spread.

(Comprehensive reporting by reporter He Yating/responsible editor: Hu Long)

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