China's New Home Prices in May Fall at Largest Rate in 10 Years

New home prices in China have fallen at the largest rate in 10 years.

According to the National Bureau of Statistics of China on the 17th, new home prices in 70 medium and large cities in China fell by 0.7% month-on-month in May, marking the largest drop since October 2014 (0.8%). The year-on-year decline reached 4.3%.

[Image source=AFP Yonhap News]

In the primary market, 68 out of the 70 cities surveyed by the government showed a downward trend in prices, an increase from 64 cities in April. In the secondary market, price weakness was confirmed in all 70 cities, up from 69 cities in April.

In May, new home prices in China's first-tier cities fell by 0.7% month-on-month, an increase from 0.6% in April. The decline in Beijing, Guangzhou, and Shenzhen ranged from 0.8% to 1.4%, while Shanghai saw a 0.6% increase.

This data came two weeks after the Chinese government introduced a 300 billion yuan re-lending support plan allowing local governments to purchase unsold homes from developers to clear housing inventory and stimulate the market.

Yan Yuejin, director of E-House China, a real estate company based in Shanghai, said, "Housing prices have fallen almost everywhere, indicating that local governments still face pressure to dispose of inventory," adding, "However, the price decline also means that attractive discounts are being offered to lure buyers." He further noted, "It is important to manage buyers' price expectations and prevent the spread of a wait-and-see attitude."

According to China Real Estate Information Corporation, the transaction volume of the top 100 developers in mainland China in May was 322.4 billion yuan (approximately 61.2689 trillion won), a 3.4% increase from the previous month but still down 33.6% compared to the same period last year. Guan Longxue, senior analyst at the Residential Data Research Center, pointed out, "Overall, the market remains sluggish," and added, "Due to weak confidence, the effects of support policies will only be temporary." Guan emphasized, "In the long term, the recovery of the real estate market depends on the recovery of employment and income expectations."

Meanwhile, China's unemployment rate for May, announced on the same day, remained unchanged at 5.0% compared to the previous month (5.0%).