China home prices dropped at a faster pace in August, underscoring why policymakers stepped up efforts at the end of month to address a slowdown that’s weighing on the world’s second-largest economy.
New-home prices in 70 cities, excluding state-subsidized housing, declined 0.29% last month from July, when they fell 0.23%, National Bureau of Statistics figures showed Friday. Existing home prices slid 0.48% from a month earlier, the most since 2014.
China at the end of August unveiled fresh reductions in down-payment requirements for homebuyers and allowed lenders to lower rates on existing mortgages to stimulate purchases. The country’s four biggest cities quickly adopted the measures, though analysts have questioned whether the steps are enough to end the years-long housing crisis.
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“While the Chinese government has recently strengthened policy support for the property sector, we expect the impact on property sales to be short-lived and differentiated between tiers of cities,” Moody’s Investors Service analysts said this week, revising their outlook on the sector to negative.
In the latest sign of industry stress, Sino-Ocean Group Holding Ltd. said on Friday that it has suspended payment on all its offshore borrowings, indicating the downturn is hurting even developers with state links. Meanwhile, industry giant Country Garden Holdings Co. has been trying to stave off a default by seeking to extend bond payments.
So far officials have refrained from resorting to a large-scale bailout for the industry, spurring concerns about the economy and putting the government’s 5% growth target at risk.
The most recent stimulus resulted in a spurt of home sales in larger cities that is already losing momentum. In Beijing, sales of existing homes plunged 35% to about 1,700 units last weekend from 2,600 in the weekend immediately after the easing, according to estimates from a top property agency in China. New homes sold by developers in the capital city showed a similar trend.