In May, new home prices in China experienced their steepest decline in nearly a decade, despite the implementation of a massive rescue package aimed at stabilizing the market. According to data from the National Bureau of Statistics, prices of new homes in 70 medium and large cities fell by 0.7 percent month on month, the sharpest drop since October 2014, when prices fell by 0.8 percent. On a year-on-year basis, prices slumped by 4.3 percent.
The primary market saw prices decrease in 68 out of the 70 cities surveyed, compared to 64 cities in April. The secondary market reported price declines in all 70 cities, up from 69 cities in the previous month.
In tier-1 cities, new home prices fell by 0.7 percent month on month in May, a slight increase from the 0.6 percent decline in April. Beijing, Guangzhou, and Shenzhen saw price decreases ranging from 0.8 percent to 1.4 percent, while Shanghai experienced a 0.6 percent rise in prices.
This disappointing data comes just two weeks after Beijing unveiled an ambitious rescue plan for the sector. The plan includes a 300 billion yuan (US$41.3 billion) relending facility designed to help local governments purchase unsold homes from distressed developers, thereby clearing excess housing inventory and supporting the market.
Additionally, China’s three largest cities—Shanghai, Shenzhen, and Guangzhou—have lowered mortgage rates and relaxed home buying restrictions to attract buyers back into the market.
“The data shows prices are down almost everywhere, which indicates that local governments are still facing significant pressure to reduce housing inventory,” said Yan Yuejin, director at the Shanghai-based E-house China Research and Development Institute. “The drop in prices also suggests that developers have adjusted their strategies, offering attractive discounts to lure buyers.”
Yan emphasized the importance of managing buyers’ expectations on prices and preventing a wait-and-see sentiment from spreading. While the rescue measures are substantial, their impact has yet to be fully realized, and the market continues to face significant challenges.
The government’s efforts to stabilize the market include not only financial support but also policy adjustments aimed at boosting buyer confidence. However, the persistent decline in prices highlights the complexity of the issues facing China’s property market and the need for sustained and multifaceted intervention.
As the market continues to adjust, the coming months will be crucial in determining the effectiveness of the rescue measures and the overall direction of the property sector in China.
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