In May, housing prices in China’s 70 major cities continued to fall, with significant declines observed in both new and used home prices. New home prices decreased by 0.7% month-on-month, while used home prices dropped by 1.0% MoM, marking the most significant monthly sequential declines in the current cycle. Since reaching their peak, new home prices have fallen by 6.4%, while secondary market prices have declined by 12.3%.
Out of the 70 cities sampled, only two saw an increase in new home prices in May, with no cities experiencing an increase in the secondary market. This was a concerning trend compared to April, when six cities saw increases in new home prices and one city saw an increase in the secondary market. Year to date, only two cities have seen new home prices rise, with none observing increases in secondary market prices. 16 and 48 cities in the sample have experienced declines of over 3% in primary and secondary markets, respectively. New home sales remained in contraction at -27.9% year-on-year YTD.
Real estate investment saw a year-on-year decline of 10.1% YTD in the first five months of the year, down from 9.8% YTD in the first four months. This was below market expectations, despite economists being increasingly pessimistic about the indicator. New home starts fell by 24.2% YoY YTD, a slightly smaller decline than before.
The disappointing data from May may raise concerns about whether policy support measures implemented so far will be enough to stabilize or reverse falling housing prices
