By Liangping Gao and Ryan Woo
BEIJING (Reuters) -Chinese house prices fell at the fastest pace in more than 9.5 years in May, official data showed on Monday, with the property sector struggling to find a bottom despite government efforts to curb oversupply and support debt-laden developers.
According to Reuters calculations based on data from the National Bureau of Statistics (NBS), prices fell by 0.7% in May compared to the previous month. This is the eleventh consecutive monthly decline and the strongest decline since October 2014.
On an annual basis, house prices fell 3.9% from a year earlier, compared to a decline of 3.1% in April.
China’s indebted real estate sector, once a key driver of the country’s economic growth, has been hit by several crises since mid-2021, including developers defaulting on their debts and halting construction of pre-sold housing projects.
Authorities have stepped up measures to support the crisis-hit real estate sector, including facilitating 300 billion yuan ($41.35 billion) to clear the huge housing stock, cut payments and relax mortgage rules.
But analysts believe these measures will do little to absorb the huge housing stock, and that lifting restrictions on home purchases in big cities could further dampen buying sentiment in smaller towns.
Prices for new homes fell last month in almost all 70 cities surveyed by NBS.
“The latest policy has boosted the second-hand housing market in major cities, but the liquidity problem of real estate enterprises has not yet been solved and the crisis of confidence in the new housing market has not yet been resolved,” said Xu Tianchen. senior economist at the Economist Intelligence Unit.
In addition, official figures on Monday showed that property investment fell 10.1% in the first five months of the year from a year earlier, after a 9.8% drop in January-April. Home sales fell faster in January and May.
China’s real estate market is set to diverge, says Nie Wen, economist at the Shanghai Hwabao Trust, with new home sales in big cities driven by those who have managed to renovate and sell their existing homes, while in small towns it is expected property will be sold. continue to decline due to an oversupply of housing and an outflow of population groups.
Policymakers are expected to support local governments and state-owned enterprises with discounted loans to buy unsold houses for low-cost housing while lowering interest rates and fees to help homeowners improve their homes, Nie said.
($1 = 7.2557 Chinese Yuan Renminbi)
(Reporting by Ella Cao, Liangping Gao and Ryan Woo; Editing by Kim Coghill and Sonali Paul)
