Due to the rare convergence of demand for Chinese goods, supply has dropped by Reuters

By Liangping Gao and Ryan Woo

BEIJING (Reuters) – China’s real estate problems worsened last month as prices for new homes and resales fell amid deep contractions in construction and developers’ investment put pressure on the sector in a single drop.

China’s real estate market, which by some measures accounts for a quarter of gross domestic product, has slowed sharply since May, and stress in the sector has been further shaken by the liquidity crisis that has engulfed some of the country’s largest and most. debtor developers.

Most analysts, however, expect demand and supply to return to more normal conditions by the end of the year or early 2022, while regulators shape policies to stabilize the sector.

New home prices fell by an average of 0.2% since September in the last month, according to estimates released by Reuters on Monday, the National Statistics Office (NBS), the first drop since March 2015. Six of the 70 major cities followed by the office.

On the supply side, new construction starts fell 33.14% year-on-year in October, extending the 13.54% fall in September, while overall developer investment in projects fell 5.4% from a 3.5% drop a month earlier, according to Reuters NBS estimates. data shown.

Tighter regulations on new borrowing since last summer have tightened economics on developers and given more and more shade to new projects. China is expected to remain steadfast in its policies of reducing over-indebtedness and speculative home purchases, although it has eased funding conditions to help real home buyers.

(GRAPH: New housing prices are falling in many cities in mainland China – https://graphics.reuters.com/CHINA-ECONOMY/HOMEPRICES/lbpgnowdwvq/chart.png)

REGULATORS OBJECTIVE Stability

“Overall, real estate policies have appeared‘ bottom ’, but the market is still adjusting downwards,” said Zhang Dawei, chief analyst at property agency Centaline.

“Policies will be increasingly relaxed, and the market is expected to stabilize gradually, as the goal of the regulation is to stabilize the market, not to rise or fall significantly,” Zhang said.

Authorities said in September that banks should offer financial support to real home buyers, who are newly married or looking for low-cost housing, in a so-called “rigid” demand.

New mortgage loans rose 40% in October from the previous month to 348.1 trillion yuan ($ 54.55 billion), although the amount was more than 7% of the monthly average for the first nine months of the year.

In recent weeks, some Chinese banks have accelerated home lending to boost buyer sentiment, but lenders have not been given any new approval, bankers had previously told Reuters.

“Markets are expected to bottom out by the end of the year or early next year,” as supply and demand for mortgages return to normal, said analyst Xu Xiaole of the Beike Research Institute.

In October, monthly prices rose in 13 of the 70 cities, with prices rising in September in less than 27 cities, the lowest figure since March 2015.

In the month, home sales fell 22.65% year-on-year to 1.24 trillion yuan, according to Reuters estimates, the fourth consecutive decline and the lowest this year.

In the resale home market, prices fell in 64 of the 70 major cities followed by the NBS, twice without changing prices and four times higher.

Resale prices have fallen in almost every city this year, and have fallen in at least 20 cities in five months or more. At the southern technology center in Shenzhen, prices have been falling for six months in a row.

($ 1 = 6.3818 renminbi)

(This story has been rewritten to read the “decline” to fix the verb in paragraph 8, not “decline”).