China's new home prices fall at fastest pace in 10-years
What's the story
China's property market experienced a significant downturn in May, with home prices seeing the largest drop since October 2014.
Data from the National Bureau of Statistics revealed that new-home prices in 70 cities, excluding state-subsidized housing, fell by 0.71% from April.
The value of existing homes also decreased by 1%, marking the steepest decline since at least 2011 when China began its current data collection method.
Policy impact
Government measures fail to revive property market
In response to the market downturn, the Chinese government introduced a comprehensive real estate rescue package last month.
The plan included easing mortgage rules and encouraging local governments to purchase unsold homes.
Despite these efforts, Raymond Cheng, head of China property research at CGS International Securities Hong Kong, stated that weaker-than-expected home prices indicate these measures have not yet bolstered homebuyers' confidence.
Future predictions
Analysts predict further easing measures
Wall Street economists anticipate that Beijing will introduce new measures and additional funding to support the market.
Top policymakers have urged officials to be more "creative and bold" in implementing supportive measures.
JPMorgan Chase & Co. property analyst Karl Chan expects further easing of restrictions on home purchases, while HSBC economists including Jing Liu predict more measures to destock inventories.
Financing hurdles
Funding challenges persist for property developers
Despite the government's efforts to stimulate the property market, funding for developers remains a challenge.
A "white list" of property firms eligible for loans was created by the government last year, but a broad gauge of financing for developers, including loans, bonds, and proceeds from home sales, has significantly decreased.
It was down 24.3% from a year earlier, leading to investor skepticism about the housing slump reaching a turning point for cash-strapped builders.
Sales increase
Residential sales rise despite property market slump
Despite the overall downturn in the property market, residential sales in China saw an improvement of 13.5% from April, marking the first significant increase this year.
UBS Group AG's chief China economist, Wang Tao, predicts that China's property sales will likely bottom out in the next two to three months with the help of ongoing policy easing.