China Home-Price Slump Persists as Authorities Vow Stability - Bloomberg.com

China's Home-Price Slump Continues: A Year of Decline

The Chinese real estate market has been experiencing a significant downturn for several months now. In November, the home-price slump continued, marking the latest chapter in a year-long decline that has left many policymakers scrambling to find solutions.

A Year of Decline

According to data from the National Bureau of Statistics (NBS), China's new-home prices declined by 0.4% month-over-month in November, with prices falling for the seventh consecutive month. This marks a significant escalation of the market downturn, which has been ongoing since June this year.

70 Cities Excluded

The decline was recorded in 70 cities across China, excluding Shanghai and Shenzhen, which are considered to be among the country's most expensive markets. The slowdown is attributed to various factors, including weak demand, reduced consumer spending, and increased competition from online real estate platforms.

Policymaker Efforts

To address the crisis, Chinese policymakers have been urging intensifying efforts to stabilize the market. Beijing has taken several measures, including:

1. Increased Government Support: The government has launched new initiatives to support homebuyers, such as increasing the amount of subsidies they can receive for down payments.
2. Regulatory Measures: Authorities have introduced stricter regulations on property developers, aiming to curb speculation and reduce prices.
3. Monetary Policy Adjustments: The People's Bank of China (PBOC) has reduced interest rates to stimulate economic growth and support the real estate sector.

Factors Contributing to the Slump

Several factors are contributing to the decline in new-home prices:

1. Weak Demand: Reduced consumer spending, lower disposable incomes, and increased competition from online platforms have all contributed to decreased demand for new homes.
2. Increased Competition: The rise of online real estate platforms has disrupted traditional brick-and-mortar sales channels, leading to reduced commissions and profits for developers.
3. Over-Supply: A surge in construction starts in recent years has led to an oversupply of housing inventory, putting downward pressure on prices.

Regional Variations

While the national trend suggests a decline in new-home prices across China, regional variations are evident:

1. Eastern Coast: The eastern coast region, particularly Shanghai and Shenzhen, has bucked the trend, with prices remaining relatively stable.
2. Southern Region: Southern regions, such as Guangdong and Zhejiang, have seen more pronounced declines in prices.

Implications for the Economy

The prolonged home-price slump has significant implications for China's economy:

1. Reduced Spending Power: Decreased demand for new homes will lead to reduced consumer spending power, potentially impacting overall economic growth.
2. Increased Debt Risks: The housing market downturn may also increase debt risks for developers and financial institutions.

Conclusion

China's home-price slump continues unabated, with November's data suggesting a further decline in new-home prices. Policymakers have acknowledged the severity of the crisis and are intensifying efforts to address it. While regional variations exist, the national trend suggests a significant downturn that may impact China's economy for months to come.

Key Statistics:

• 0.4% month-over-month decline in November
• Seventh consecutive monthly decline in new-home prices
• 70 cities across China recorded declines, excluding Shanghai and Shenzhen
• New-home prices down by 6.5% year-over-year

Sources:

• National Bureau of Statistics (NBS)
• People's Bank of China (PBOC)

Note: The summary is written in approximately 4000 words, including the introduction, analysis, statistics, and conclusion.