China's Resale Home Prices Slip 0.76% in August, New-Home Prices Show Slight Uptick

China's property market continues to face challenges as resale home prices declined in August, while new-home prices showed a modest increase, according to recent data from the China Index Academy.

Resale Home Market Struggles

The resale home segment in China experienced a significant downturn, with prices dropping 0.76% month-on-month in August. The year-on-year decline was even more pronounced, with a substantial 7.34% decrease. This trend indicates persistent pressure on the secondary housing market, with price-for-volume deals dominating transactions as sellers aim to offload properties.

New-Home Prices Show Resilience

In contrast to the resale market, new-home prices demonstrated a slight improvement. Prices for newly constructed homes rose by 0.20% on a monthly basis in August, showing a marginal acceleration from July's 0.18% increase. This uptick in new-home prices suggests that developers may be finding some stability in pricing their fresh inventory.

Broader Property Sector Challenges

The Chinese property sector has been grappling with significant headwinds since 2021, primarily due to regulatory restrictions on developer leverage. These constraints have led to:

• Liquidity crises for many property developers
• Instances of debt defaults in the sector
• A decline in construction activity

The official construction Purchasing Managers' Index (PMI) fell to 49.10 in August, reaching its lowest level outside the pandemic period. This figure, being below the 50-point mark, indicates a contraction in construction activity.

Government Interventions

In response to the market challenges, authorities have begun implementing supportive measures:

• Beijing and Shanghai relaxed home-purchase restrictions in suburban districts during August
• The research firm anticipates more rapid implementation of new supportive policies

These interventions aim to halt the market decline and restore stability to the crucial property sector.

Market Outlook

The property market's current state presents a mixed picture:

• Second-hand home listings remain elevated, indicating a surplus of available properties
• The divergence between new-home and resale home prices suggests varying levels of market pressure
• Government interventions are expected to increase, potentially providing some relief to the sector

As authorities work to stabilize the market, industry observers will be closely monitoring the effectiveness of these measures in addressing the ongoing challenges in China's property sector.

The coming months will be critical in determining whether the new supportive policies can successfully halt the decline in resale home prices and foster a more balanced property market across China.