Real estate market support policies cannot maximize their effectiveness in the context of China’s prolonged economic recession – Photo: REUTERS
On August 15, Reuters analyzed data from the National Bureau of Statistics (NBS) of China and said that new home prices in July in China fell 4.9% compared to the same period last year. This is also the sharpest decline since June 2015.
Previously, China also recorded a 4.5% decline in June.
Despite a series of support policies being issued, they have not been able to stabilize prices and restore market confidence in the real estate industry. The prolonged market downturn has severely affected the world’s second largest economy and consumers.
Analysts point out that Beijing’s target of 5% gross domestic product (GDP) growth this year may be too ambitious, even though other economic indicators remain stable.
“To recover, the real estate market may continue to need support policies,” analysts from ING Group said.
Beijing has recently stepped up efforts to support the sector by cutting mortgage rates and lowering housing prices.
Song Hongwei, research director at Tongce Real Estate Research Institute, said that although these policies have played a certain role in supporting the market, the impact of the external recession has limited the effectiveness of these policies.
New home prices in China fell for a 13th straight month, falling 0.7% month-on-month.
Analysts at Goldman Sachs Bank said that the Chinese real estate market needs more specific and drastic support policies.
“We continue to expect further easing measures, including easing home purchase restrictions in major cities, lower mortgage rates, and other support measures in the coming months.
However, given the prolonged downturn in mid-tier cities and private investors, the above easing measures may also lead to a slow recovery that will last for years to come,” analysts said.
In late July, China’s Politburo reaffirmed the government’s commitment to supporting the completion of unfinished housing projects and turning unsold apartments into affordable housing.