- Property prices stagnate despite policy support measures
- New home prices in May ease 0.2% m/m, down 3.5% y/y
- Property investment falls 10.7% y/y, sales drop 2.9% January-May
BEIJING, June 16 (Reuters) - China's new home prices fell in May, extending a two-year long stagnation, official data showed on Monday, highlighting challenges in the sector despite several rounds of policy support measures.
New home prices fell 0.2% month-on-month in May after showing no growth the previous month, according to Reuters calculations based on data released by China's National Bureau of Statistics (NBS).
From a year earlier, prices fell 3.5% in May from a 4.0% decline the previous month.
Home prices are facing renewed downward pressure following the traditional peak season, driven by a combination of policy factors, market demand, regional disparities and shifting buyer sentiment, said Zhang Dawei, chief analyst at Centaline Property Agency.
The property sector, once a key driver of growth for the world's second-largest economy and accounting for roughly a quarter of economic activity at its peak, holds around 70% of Chinese household wealth.
The market entered a prolonged slump in 2021, with debt-laden developers struggling to deliver homes that buyers had already paid for, further denting consumer confidence.
After policymakers announced supportive policies in recent months as Beijing braced for extended trade tensions with the U.S., positive signs have emerged in the housing market.
A private survey by property researcher China Index Academy showed the average price of new homes across 100 cities in China climbed 0.30% in May, more than doubling from a month earlier.
Some cities in China have also been easing restrictions on housing provident fund programmes for individual mortgage loans in recent weeks, as the central bank's rate cut for the loans went into effect in early May.
Still, challenges persist. Separately, official data on Monday showed property investment fell 10.7% year-on-year, while sales by floor area dropped 2.9% in the January-May period.
Home prices are expected to fall nearly 5% this year and are set to remain stagnant in 2026, a Reuters poll showed last month.
Though major cities had shown tentative signs of recovery, home prices declined 0.2% in May, ending five consecutive months of 0.1% monthly gains.
Meanwhile, smaller Tier 3 and Tier 4 cities extended their trend of decline since May 2023, with prices falling 0.3% in May, more than April's 0.2% decrease.
Centaline's Zhang warned that without stronger policy support, the traditional June-August slowdown could see steeper price declines than April-May's fall.
He stressed the need for differentiated, city-specific policies targeting various buyer segments.
"In third- and fourth-tier cities, efforts should be intensified to support local industries and attract return migration to fundamentally address insufficient demand."
At a cabinet meeting on Friday, Chinese leaders pledged to optimise policies to boost demand, improve supply, and stabilise the property market more effectively.
Reporting by Liangping Gao, Xiuhao Chen and Ryan Woo; Editing by Kim Coghill and Jacqueline Wong
Source: Reuters