According to data from Tuesday’s National Bureau of Statistics, home prices in China have continued to decline compared to last year, both for new and existing properties. However, there was a slight improvement in month-over-month prices.
In March, new-home prices in 70 cities (excluding state-subsidized housing) dropped by 2.7% compared to the previous year, surpassing February’s 1.9% decline. On a monthly basis, there was a 0.34% decrease, slightly less than the 0.36% fall seen in February.
Existing home prices across all 70 cities plummeted by 5.9% year-over-year, worsening from January’s 5.2% decline. Monthly, prices dipped by 0.53%, showing a slight improvement from February’s 0.62% decrease.
The decline in prices has led to a significant drop in residential home sales, which fell by 31% in the last quarter compared to the same period in 2023. Additionally, property developers’ cash reserves contracted by 26%.
READ ALSO: China Urges Better Financing Coordination for Housing Sector
China’s real estate sector, once a powerhouse of the economy, has faced severe challenges in recent years. Analysts, including Charlene Chu from Autonomous Research, have described the market as being “in the middle of a collapse,” with further challenges expected.
Despite the real estate downturn, China’s economy has shown signs of recovery. In the first quarter of 2024, the economy grew by 5.3%, surpassing analysts’ expectations and the growth seen in the previous quarter.
READ ALSO: Australia- Homeownership, homelessness and housing supply
To address challenges in the real estate sector and renew growth, Chinese authorities are focusing on growing sectors such as electric vehicles, solar energy, and lithium-ion batteries. Analysts believe this shift could lead to a “two-speed economy,” with some sectors thriving while others struggle.
