High-rise buildings in downtown Shanghai, China, March 12, 2018. China unexpectedly slashed its benchmark mortgage reference rate on Friday for the second time this year, as Beijing seeks to revive its struggling property sector to shore up the property market. economy.
Johannes Esseler | AFP | Getty Images
Data on Saturday showed that prices of new homes in China were flat in June, the weakest result this year, increasing pressure on policymakers to provide more stimulus as the economic recovery falters.
It was unchanged from a month earlier, with gains slowing nationwide and down from a 0.1 percent gain in May, according to Reuters calculations based on National Bureau of Statistics (NBS) data. Prices were also flat year-over-year, having risen 0.1% in May.
The real estate sector, which accounts for a quarter of the world’s second-largest economy, slumped last year as developers defaulted on debt and suspended construction on pre-sold housing projects.
Over the past year, central and local governments and regulators have announced a series of policies to support the industry.
Measures include expanded financial support for developers and multi-pronged incentives for homebuyers. But an uncertain economic outlook and continued weakness in the sector have dented confidence and household demand, dampening hopes for a quick recovery.
Weak house prices and falling exports have increased pressure on policymakers to do more to prop up housing and revive sluggish demand.
Markets widely expect more stimulus measures at a Politburo meeting later this month, setting the tone for economic policy in the second half of the year.
“The real estate market urgently needs strong policies to boost confidence, as small-scale policies have been unable to rescue the declining sentiment,” said Chen Xiao, an analyst at real estate data provider Zhuge House Hunter.
Policies such as promoting employment and income must be strengthened to support home purchases, Chen said.
New housing prices rose month-on-month in 31 of the 70 cities monitored by the National Bureau of Statistics, down from 46 in May. Prices in first-tier and second-tier cities such as Beijing were flat after rising in May. Third-tier cities fell 0.1%.
Zou Lan, a senior official at the People’s Bank of China, said on Friday that there is still room for “marginal optimization” in real estate policies, given the profound changes in supply and demand in the real estate market.
“PBOC officials hinted at further property policy easing at Friday’s press conference, and we expect the Politburo meeting in July to emphasize the need to stabilize the property market,” Goldman Sachs economists wrote in a research note. ”
The central bank on Monday extended until the end of 2024 some of the policies included in a November rescue package for cash-strapped industries. But uncertainty about the economic outlook and weakness in the sector have dented confidence and dampened hopes for a quick recovery.
According to the central bank’s quarterly survey, 16.5% of households believe that house prices will fall in the third quarter, down from 14.4% in the previous quarter.