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China on the brink of a plummeting real estate market | World | News

China on the brink of a plummeting real estate market |  World |  News
China on the brink of a plummeting real estate market |  World |  News

 


China's housing crisis shows no signs of improvement as property prices in May fell even faster than the previous month according to the latest data.

According to the Chinese National Bureau of Statistics, the price of new housing in 70 Chinese cities fell by 0.71% compared to April.

This is the biggest decline recorded by Xi Jinping's government since October 2014 – the last time China's property market experienced a worrying slowdown.

Data showed the value of existing homes also fell 1 percent last month.

Overall, new home prices plunged 4.3 percent year-on-year, while existing home prices fell 7.5 percent.

The housing sector has traditionally been a major driver of investment in China, accounting for more than 25% of the country's overall economic activity.

But the market has been struggling for four years and falling prices are taking a toll on the People's Republic's attempts to fully recover from the coronavirus pandemic.

President Xi introduced a new bailout package last month in a desperate attempt to save the sector and address falling prices.

Among the measures introduced were a relaxation of mortgage rules as well as a request for local governments to buy unsold homes to transform them into social housing.

The People's Bank of China joined the rescue missions, saying it would provide 300 billion yuan ($32.6 billion) in loans through a new national program.

However, analysts warned the plan was unlikely to do much to help the struggling sector and could actually dampen buyer confidence in China's smaller cities.

Economist Xu Tianchen said: “The latest policies have boosted the second-hand housing market in major cities, but the liquidity problem of real estate businesses has not yet been alleviated.

“And the crisis of confidence in the new home market is not yet resolved.”

The Chinese Cabinet has already indicated that it is ready to reduce housing stock if the measures fail to produce results.

Officials were reportedly urged to keep an “open mind” and consider possible new policies that could help stabilize the market.

The Cabinet said: “We must steadily and concretely advance the work of digesting and revitalizing existing homes and land with an open mind and broad thinking. »

The housing crisis is a reflection of China's current financial woes, with the country's industrial production growth also showing signs of slowing.

In May, the recorded figure was 5.6 percent, down from 6.7 percent in the same month in 2023 and down 0.4 percent from economists' forecasts.

Sources

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2/ https://www.express.co.uk/news/world/1912356/china-xi-jinping-housing-market-crisis

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