China’s Housing Prices Decline in December Amid Increasing Demands for Further Measures

China's Housing Market Faces Continued Decline

Bloomberg

According to recent data, residential property prices in China dropped again in December, marking the end of another challenging year for the country's real estate sector as its debt issues remain unresolved.

Statistics from the National Bureau of Statistics revealed that the cost of new homes in 70 major cities, not including government-subsidized properties, decreased by 0.37% compared to November, which had already seen a 0.39% decline. Meanwhile, prices for previously owned homes—less influenced by state controls—fell by 0.7%, the sharpest monthly drop in over a year.

The prolonged slump in China’s property market has been a drag on the broader economy for over four years, pushing more financially troubled developers into crisis. China Vanke Co., previously the nation’s largest developer, is currently in talks with creditors to avoid default. Last week, Jingrui Holdings Ltd. became the latest developer to be liquidated in Hong Kong after defaulting.

Lu Ting, chief China economist at Nomura Holdings Inc., recently commented, “Beijing cannot allow the property sector to deteriorate endlessly. Substantial and decisive measures are required to restore stability to both the housing market and the wider economy.”

In December, Chinese authorities pledged to ramp up support for the housing market, including encouraging the purchase of existing homes to help reduce unsold inventory. Sources also indicated in November that policymakers are considering incentives such as mortgage subsidies for first-time buyers.

John Lam, head of China property research at UBS Group AG, predicted in a November interview that home prices are likely to continue declining for at least another two years. Lam, who once anticipated a rebound, noted that resale home values in major cities have fallen by over 33% from their highest points.

Fitch Ratings cautioned in October that the volume of new-home sales could shrink by another 15% to 20% before the market finds its footing. The agency also warned that banks are likely to face persistently high levels of property-related bad loans in the coming year.

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