China struggles to arrest a 9-month slide in new home prices as cash squeeze among big developers keeps buyers on sidelines
- New home prices in 70 major Chinese cities declined for a ninth straight month in February, statistics bureau says
- More property easing measures can be expected, Goldman Sachs says, but L-shaped recovery seen at best given weak fundamentals
Prices of new homes in 70 medium and large cities fell 0.4 per cent from a month earlier, following a similar 0.4 per cent setback in January, according to data released by the statistics bureau.
New home prices weakened in 59 of the cities surveyed by the government, versus 56 in January, while prices for existing homes declined in 68 cities just like in January, the bureau said.
“There is a marginal improvement in home prices, and concerns about a rapid decline in prices have passed,” said Guan Rongxue, a senior analyst at Zhuge Real Estate Data Research Centre. Still, cities with weaker home prices continue to make up a big portion, which indicates a weak recovery momentum, she added.
Authorities in Beijing stepped up efforts this year to revive the housing market, including a larger than expected liquidity injection and a cut in interest rates tied to home mortgages. Beijing also created a “whitelist” of developers it deems worthy of financial support from lenders to ensure a smooth delivery of homes to buyers and to repay their borrowings.
The persistent slump indicates homebuyers are not rushing back into the market, worsening the cash flow problem for some of the nation’s biggest home builders. Reports this week showed companies including China Vanke and Country Garden Holdings struggling to cope with weak sales and liquidity as more debts come due.