(Bloomberg) -- China’s home prices fell in September at almost the same pace as the previous month, suggesting that the country’s efforts to stabilize its real estate sector may not be enough.
New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.71% from August, largely in line with a 0.73% decline a month earlier, National Bureau of Statistics figures showed Friday. Values of used homes fell 0.93%, following a 0.95% decline a month earlier.
Beijing is struggling to arrest the property sector’s decline at a time when deflationary pressure is adding to the economic gloom. China on Thursday pledged to nearly double the loan quota for unfinished residential projects to 4 trillion yuan ($562 billion) and planned to renovate 1 million homes in older, rundown dwellings in large cities. The plans underwhelmed, with investors looking for stronger policies.
That followed a commitment from top leaders in late September to stem the decline of the real estate market, in what Morgan Stanley called its most determined vow since the industry downtrend started more than three years ago.
The property sector will continue to be a drag on the world’s No. 2 economy “due to the negative impact on household wealth, of which up to 70% are in properties,” Woei Chen Ho, an economist at United Overseas Bank Ltd., said before the data release.
China’s gross domestic product grew 4.6% in the July-to-September period from a year ago, the slowest pace since March 2023 and lower than the 4.7% growth in the second quarter. The property market continued to shrink, with investment plunging 10.1% in the first nine months.
New-home prices fell 6.1% in September compared with a year ago, steeper than August’s 5.7% drop, the statistics bureau said. Existing-home prices decreased 9%. Residential sales slipped 8.7% in September from a year earlier, though the decline narrowed from August, according to Bloomberg calculations based on official data.
The latest steps to revive the housing market led to improved sales in the first two weeks following the stimulus blitz announced last month.
In Shenzhen, the daily average of second-hand sales this month was the highest level in almost four years, local media reported, citing data from Beike Research Institute as of Oct. 13. New-home sales jumped 71% last week from a week earlier, Centaline data showed. In Shanghai, used-home sales surged to the highest in more than a year last Sunday, according to Lu Wenxi, an analyst at property agency Centaline Group.
Yet a broad revival beyond the biggest cities isn’t in sight. Property prices will likely take two years or more to stabilize, Citigroup Inc. analysts including Griffin Chan wrote in a Monday report.
--With assistance from James Mayger.
(Updates with more data and analyst comments throughout.)
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