(Bloomberg) -- China’s residential market sales fell again in November, suggesting the property sector still has some ways to go before it can show a sustained recovery.
The value of new home sales from the 100 biggest real estate companies dropped 6.9% from a year earlier to 363 billion yuan ($50 billion), reversing a 7.1% gain in October, according to preliminary data from China Real Estate Information Corp. Sales declined 16.6% from the previous month.
Beijing is struggling to arrest the decline in the property sector, with deflationary pressure adding to the economic gloom. Investors are expecting more policy support so China can meet its economic target of around 5% this year.
President Xi Jinping reiterated the need to hit that goal last month, while International Monetary Fund Managing Director Kristalina Georgieva has warned that China’s annual growth could drop to “way below” 4% in the future without reforms to lift domestic consumption.
Investors are closely watching whether China’s longest housing slump would show signs of ending. There have been some indications that point to a tentative recovery and improving confidence following a slew of policies from monetary easing to homebuyer support.
Housing prices showed “signs of stabilization,” especially in top-tier cities, according to Lu Ting, an economist at Nomura Holdings Inc. Existing home prices in Shenzhen, widely seen as a bellwether, rebounded in October, for the first time since since April last year, according to official data. The decline in overall home prices also abated in September and October.
The current round of stimulus measures yields “a bigger impact” than in May when stimulus boosted sales for just a month, Bloomberg Intelligence’s property analyst Kristy Hung wrote in a recent note.
Still, Hung said the recovery may be limited to state-owned developers and large cities with smaller ones left out.
“Limited housing demand, coupled with ample supply with larger cities relaxing their home-buying curbs, suggest buyers with purchasing power might increasingly gravitate toward quality projects in larger cities,” Hung said.
With prices still falling broadly, those with existing homes will probably wait until prices start rebounding before they purchase a better dwelling, said Wang Ying, managing director at Fitch Ratings in Shanghai.
--With assistance from Tian Ying.
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