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- House prices in China fell nearly 0.4% last month, per official statistics published Thursday.
- That's the steepest drop since February 2015.
- It’s a sign a key engine for the world’s second-largest economy is still sputtering, despite Beijing’s stimulus packages.
China's property crash worsened last month in a sign the world's second-largest economy is still facing headwinds despite recent government interventions.
National Bureau of Statistics data published Thursday showed that new-home prices in 70 cities dropped 0.4% between September and October. That's the fifth month in a row prices have fallen and the steepest month-on-month decline since February 2015, according to Bloomberg.
Meanwhile, existing-home prices slumped 0.6% in October, per Thursday's data, the most in nine years.
Private ownership of property makes up a quarter of China's total Gross Domestic Product and nearly 70% of all household wealth, according to data from the Cato Institute.
That means the slump in home prices has been a major drag on the economy. China's growth faltered over the first half of 2023 before rebounding to beat third-quarter expectations, and Beijing is still grappling with a range of other issues including deflation, soaring youth unemployment, and a steep decline in exports.
The situation has been worsened by a seemingly never-ending debt crisis that's left two of the country's biggest property developers on the brink of collapse, with both Evergrande and Country Garden defaulting on bond repayments in recent years.
The drop in home prices in October came in spite of Beijing's recent efforts to arrest declines. In August, policymakers slashed down-payment requirements and permitted lenders to cut mortgage rates as part of a stimulus package intended to boost demand in the embattled property sector.
China's flagship CSI 300 and Hong Kong's Hang Seng stock-market indexes each slipped around 1% Thursday on the worrying housing-market data.
That's a sign investors are looking past US president Joe Biden's San Francisco summit with Chinese premier Xi Jinping and zeroing back in on China's economic struggles, according to analysts.
"China's fragile housing market has loomed back into focus," Hargreaves Lansdown head of money and markets Susannah Streeter said Thursday.
"Hopes for a significant trade breakthrough from talks between Joe Biden and Xi Jinping haven't materialized, despite some limited progress in healing the relationship," she added. "But the meeting has underwhelmed, with Chinese stocks largely falling as investors cast an eye back to domestic economic problems."
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