© Reuters
biedexmarkets.com– Chinese house prices fell at a sharper pace in February than the prior month, official data showed on Friday, as the country’s property market remained under pressure from worsening sales and waning consumer confidence.
Chinese fell 1.4% year-on-year in February, about twice as much as the 0.7% drop seen in January.
The reading came despite consistent efforts from Beijing to support the housing market, including lower lending rates and fewer restrictions on homebuyers.
Prices fell about 0.36% month-on-month in February, with most cities in the country logging steady declines in prices from their 2021 peaks.
“Given the heavy weighting of property in household portfolios, it is of the utmost importance for China to stabilise the property market if it is to restore confidence. Declining property prices will create a negative wealth effect, acting as a headwind to consumption,” analysts at ING said in a note.
China’s property market decline, marked by a series of high-profile defaults over the past three years, has been a key drag on the economy, as it struggles to recover from a COVID-induced slump. The property market accounts for roughly a quarter of the overall economy.
ING analysts noted that while recent mortgage rate cuts and looser regulatory checks on the market were a move in the right direction, Beijing likely needed to do much more to support the sector.
“Real estate investment is likely to remain in negative growth for the year, and the property sector and connected industries will likely continue to see pressure for consolidation,” ING analysts said.