BEIJING, July 15 (Reuters) – China’s new home prices contracted again in June, though at a slightly slower pace, as weakness in demand across the country offset small pockets of improvement in its major cities, official data showed on Wednesday.
New home prices dropped 0.1% in June from the previous month, compared with a 0.2% decline in May, according to Reuters calculations based on data released by the National Bureau of Statistics.
On an annual basis, prices fell 3.3%, easing from a 3.5% decrease in May.
China’s housing market slump, now in its fifth year, has been constraining household consumption and exacerbating the economy’s imbalance between strong industrial supply and weak domestic demand. Economic growth slowed sharply to 4.3% in the second quarter from a year earlier, official data showed on Wednesday, missing analysts’ expectations.
While some economists said the housing market might be close to finding a bottom, others cautioned that the downturn would continue without stronger policy support due to subdued consumer confidence.
Home price data this year showed modest improvement in both new and resale markets in China’s top-tier cities, but developers in smaller cities continued to struggle with weak sales despite a renewed government push to reduce housing inventory.
New and existing home prices in tier-one cities in June rose 0.1% and 0.3% month-on-month, respectively, while prices in both markets in tier-two and tier-three cities showed no month-on-month growth.
On an annual basis, prices of both new and existing homes continued to fall across all city tiers in June, though declines narrowed in tier-one cities.
In an article released in June, Qiushi, an official publication of the Chinese Communist Party, called for repairing household balance sheets and stabilising the real estate market to “prevent the negative spiral of falling asset prices on consumer confidence”.
While local governments have been doling out incentives for home sales in the past few months, the central government has refrained from launching nationwide major support policies for the housing market as an export boom reduced the urgency for injecting bigger stimulus into the economy.
Property sales, investment and new construction starts declined at a faster pace in the first half of the year, official data showed.
(Reporting by Yukun Zhang, Liangping Gao and Ryan Woo; Editing by Jacqueline Wong)
