Image: Reuters Berita 24 English - Official data released on Friday showed that China's real estate market shrank even more in August. H...
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| Image: Reuters |
China's property market was once a key driver of economic growth, but since the summer of 2020, when regulators stepped in to stop developers from taking on too much debt, it has gone from one crisis to the next. The problems in the property market have hurt the world's second-largest economy, which almost went into a recession in the second quarter because of them.
Reuters used data from the National Bureau of Statistics (NBS) to figure out that the prices of new homes fell 0.3% from July to August. This was the fastest drop since November 2021. Prices stayed the same in July.
In August, prices for new homes fell 1.3% from a year ago, which was the fastest drop since August 2015. This was on top of a 0.9% drop in July.
According to a separate statement released by the NBS on Friday, property investment fell 7.4% year-over-year from January to August, which was the fastest drop since January to March 2020. This was on top of a 6.4% drop from January to July.
In the first eight months of the year, property sales by floor area were down 23.0% from the same time last year. This came after a drop of 23.1% in the first seven months, which showed that demand was still weak.
Since the end of June, developers stopped building pre-sold housing projects because they didn't have enough money and had to follow strict COVID rules. This hurt confidence.
Nomura said in a research note that as of Tuesday, 51 cities, which make up 26.1% of China's GDP, had full or partial lockdowns or some kind of district-based control measures in place.
The government has taken steps to help the sector, such as making it easier to buy a home, requiring less of a down payment, lowering mortgage interest rates, and lowering the prices of homes even more.
The problems in China's residential property market are likely to get worse this year. A recent Reuters poll showed that economists now expect home prices to fall in 2022 and are betting on a faster drop in property sales than they had predicted before.
