China New Home Prices Declines

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China New Home Prices Declines

China New Home Prices Declines At Fast Pace

The prices of new homes in China have declined at one of the fastest paces in almost a decade. This data was released for the month of May and showed that the property sector continues to struggle despite the big stimulus package from the government.

major problem for the Chinese property sector is the heavy debt of the developers and an oversupply of houses. With fewer buyers and an overabundance of houses, the only natural way for the prices is to go down.

House Prices Down By 0.7% In May

During the month of May, a 0.7% fall was seen in house prices when compared with April 2024. Overall, this marks the 11th consecutive m/m decline and one of the steepest declines since 2014.

And if we look at the house prices on a y/y basis, the prices are down by 3.9%. In April, the decline was 3.1% which shows that the month of May was not so good for the property sector.

The property sector of China was once a key pillar of the economy but has seen fallen under heavy debt. The problems of the property sector started in 2021 when big-name developers defaulted on their debt. At the same time, it also led to delays in the construction of various housing projects.

Since then, the Chinese authorities have taken several measures to support this sector of the economy. One of these measures was a $41.35 billion worth of stimulus package, which was aimed at easing the rules of mortgages and cutting down the payments.

According to experts, the moves from the Chinese authorities will have little impact as the housing inventory is still massive. Similarly, the government has lifted the ban on home purchases in big cities which will also impact the house prices in smaller cities.

If China's property sector remains at risk, it will become difficult for the country to score a strong GDP growth this year.

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