China’s home prices declined again in December, capping another difficult year for the country’s property sector as a prolonged debt crisis continues to drag on economic growth and strain developers’ finances.
Data released Monday by the National Bureau of Statistics showed that prices for new homes in 70 major cities, excluding state-subsidized housing, fell 0.37% from November, slightly easing from a 0.39% drop the previous month. Prices for resale homes, which face less direct government intervention and are often viewed as a clearer reflection of market conditions, slid 0.7% month on month — the steepest decline in 15 months.
The figures underscore the persistent weakness in China’s real estate market, which has been in downturn for more than four years. Once a key pillar of growth and a major store of household wealth, the sector has been battered by falling demand, excess supply and a cascade of developer defaults that have shaken buyer confidence.
Financial stress among builders remains acute. China Vanke Co., formerly the country’s largest property developer by sales, has been in talks with bondholders as it seeks to avoid a potential default. Meanwhile, Jingrui Holdings Ltd. became the latest casualty of the crisis, after a Hong Kong court ordered the winding up of the company last week following its default.
Economists warn that the continued slide in home prices poses risks not only to developers but also to broader economic stability. “Beijing cannot afford to let its property sector slide indefinitely,” said Lu Ting, chief China economist at Nomura Holdings Inc. “Much more decisive action is needed to truly stabilize the property sector and the overall economy.”
In response, Chinese policymakers have signaled renewed determination to support the housing market. Last month, senior officials pledged to step up measures to shore up residential demand, including encouraging the purchase of unsold housing to help reduce bloated inventories. Authorities are also weighing additional steps, such as offering mortgage subsidies to first-time homebuyers, according to people familiar with the discussions.
Despite these efforts, analysts remain cautious about the outlook. John Lam, head of China property research at UBS Group AG, said home prices are likely to continue falling for at least the next two years. Lam noted that resale home values in major cities have already dropped by more than one-third from their peak levels, reflecting deep and sustained pressure on the market.
As China enters another year of economic uncertainty, the property sector remains one of its most pressing challenges, with recovery likely to be slow and uneven even under expanded policy support.
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