Introduction

China’s new home prices showed no change in June, marking the weakest performance this year. This data puts additional pressure on policymakers to provide more stimulus as the country’s economic recovery faces challenges.

Details of the Report

Compared to the previous month, prices remained flat, and the nationwide increases slowed down. These figures were lower than the 0.1% gain recorded in May, as reported by the National Bureau of Statistics (NBS) data. Furthermore, prices were unchanged from the same time last year, reversing the 0.1% increase seen in May.

Impact of the Property Sector

The property sector, which accounts for a significant portion of China’s economy, experienced a sharp decline last year due to developer defaults and the suspension of presold housing projects. To revive the sector, both the central and local governments, along with regulators, have introduced various policies over the past year.

Challenges and Expectations

Despite these efforts, the uncertain economic outlook and persistent weakness in the property sector have dampened confidence and demand for homes. Weak home prices, along with falling exports, are increasing the pressure on policymakers to take further action to support the real estate market and stimulate demand.

There are expectations of more stimulus measures to be announced at a meeting of the ruling Communist Party’s Politburo later this month. This meeting will set the tone for economic policies in the second half of the year.

Expert Opinion and Insights

According to Chen Xiao, an analyst at property data provider Zhuge House Hunter, the property market requires robust policies to boost confidence as small-scale measures are no longer effective. Chen emphasizes the need for policies that strengthen employment and incomes to support home buying.

Out of the 70 cities monitored by the NBS, only 31 recorded month-on-month increases in new home prices in June, down from 46 in May. Prices remained flat in tier-one and tier-two cities, while tier-three cities saw a decrease of 0.1%.

Zou Lan, a senior official at the People’s Bank of China (PBOC), mentioned the need for “marginal optimization” of property policies due to significant changes in supply and demand in the real estate market.

Expectations for Future Action

Goldman Sachs economists anticipate further easing of property policies based on comments made by PBOC officials during a press conference. They also expect the July Politburo meeting to emphasize the importance of stabilizing the property market. The central bank recently extended some policies until the end of 2024, but the uncertain economic outlook and sector weakness continue to undermine confidence.

According to a quarterly PBOC survey, fewer households (16.5%) expect housing prices to decline in the third quarter compared to the previous quarter (14.4%).