During the month of June, new home prices in China remained unchanged, making it one of the weakest results of 2023. This has also increased the pressure on the Chinese authorities to introduce new stimulus measures to support the economic recovery.
The flat reading during June comes at a time when the home price rises are slowing down across the nation. In fact, June's reading was even lower than the gain of 0.1% during May, as per the NBS data. If we look at the reading from a year earlier, there's also no change!
Chinese Property Sector Continues To Shrink
In China, the property sector accounts for almost 25% of the economic activity. So a slump in the property sector is highly likely to affect the Chinese economic recovery as well.
If we look at the property sector, it is facing one problem after another in the form of defaults, suspended construction projects, marginal house price increases, and so on.
To counter the issues, the local as well as the central government of China have announced various policies since last year. But it appears that more stimulus measures & more relaxed policies are required to prop up the construction sector.
The government has already announced financial support for property developers and even offered incentives to home buyers. However, the economic outlook remains weak, which has also dented confidence in the real estate sector.
In addition, the falling exports are also putting pressure on the Chinese economy and making the case for stimulus measures more strong.
For the most part, yet another stimulus package from the Chinese ruling party is highly expected in July 2023. According to experts, this move will set the tone for what to expect in 2H2023.
According to one analyst, the property market of China is in dire need of a confidence boost in the form of some major policy change. Currently, small-scale policies are not enough to address the problems of this sector.