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By Liangping Gao and Ryan Woo
BEIJING (Reuters) – China’s real estate market suffered more headwinds in November as housing prices, sales, investment and construction fell due to weak demand and declining developer cash.
New home prices fell 0.3% month-on-month in November, the biggest drop since February 2015, according to Reuters estimates based on data released by the National Statistics Office (NBS) on Wednesday. This was worse than the 0.2% drop in October.
Only nine of the 70 cities tracked by the NBS had monthly price gains in November, at least since February 2015, according to Reuters estimates.
In another statement from the NBS, home sales fell 16.31% in value in its fifth month, despite gloomy demand as some cities took steps to boost transactions.
“Cities of all classes are under pressure,” said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Organization.
“There is a large scale of current market supply and weak demand. The key is to accelerate the dismantling of inventories to stabilize house prices.”
China’s real estate sector has struggled with stricter regulations this year, including bank loan cuts and financial problems that limit the amount borrowed by real estate developers.
Last week, the China Evergrande Group and another major developer Kaisa lost their offshore bond payment deadlines, and Fitch downgraded the company to a “reduced default” status.
New home prices have fallen in 64 cities out of 64 this year, according to Reuters estimates.
In terms of supply, measured by the area of new construction, they fell by 21.03% year-on-year in November for the eighth month, while real estate investment by developers fell by 4.3%.
“Due to the double impact of cyclical slowdown and (government) policies, along with the debt crisis of some developers, the property shock has yet to go through, but with a good policy response, systemic risks can be avoided,” Zhang Yi said. , Chief economist at Zhonghai Shengrong Capital Management.
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China’s top leaders said they were “for housing, not speculation” at a meeting to set the agenda on Friday. They were also committed to promoting the healthy development of the real estate market and better meeting the reasonable demand of home buyers.
“The Central Economic Work has set the tone for stabilizing growth for next year, so as government policy is put in place, economic growth will bottom out and be boosted in the fourth and first quarters of next year,” Zhang said.
At least six cities have implemented measures to encourage home purchases since November, including a reduction in subsidies or deeds, local media reported.
The unsold housing stock in China’s top 100 cities rose to a five-year high in November, according to a private sector survey last Friday.
New home prices fell 0.4% month-on-month in secondary cities and 0.3% in tertiary and four-city cities compared to zero growth in primary cities in the last month.
The S&P rating agency expects that the decline in ownership will continue in the wake of the sector’s tightening credit and austerity policies, which will lead to a 10% drop in national home sales next year.
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