China Home Prices Just Plunged The Most Since 2015

By George Lei, Bloomberg Markets Live reporter and strategist

Home Prices to Slide Amid Elusive Stimulus

China’s new home prices in July plunged the most since 2015 on a year-over-year basis, as a gauge of homebuilder stocks remain mired in a bear market. Shimao Group Holdings Ltd. — among the biggest companies on the index based on weightings — has seen its share price fall more than 50% over the past three months.

Meanwhile, remarks from the People’s Bank of China Governor Pan Gongsheng suggest policymakers are in no rush to stimulate the economy. That means the country’s battered housing sector will likely struggle to find a bottom.

July’s residential property sale values were 45% below their four-year average, deteriorating further from June when transaction amounts were 37% below average, according to a Thursday note from JPMorgan. The US bank revised lower its 2024 forecast for residential sale values to -17% year-on-year from -13%, implying a 2%-3% year-on-year decline for the rest of 2024.

The disappointing data, however, doesn’t seem likely to nudge Beijing into action. Since last year, policymakers have drip-fed fiscal stimulus into the slowing economy, stopping short of any big moves. The measured response, on top of the housing market downturn, was largely responsible for a surprise moderation in fixed-asset investments in the first seven months of the year.

On Thursday, state media published a pair of interviews with PBOC’s Pan, who hinted that further aid will come to moderate prices but emphasized “policy patience and stability” and pledged to refrain from any “drastic tightening or drastic easing” of monetary policy.

Pan also reiterated the central bank’s commitment to a 300 billion yuan ($41 billion) re-lending program to help fund local-government purchases of unsold homes.

That program, however, is likely far from enough to fix China’s housing woes. The International Monetary Fund said the country probably needs $1 trillion to help complete and deliver properties that are pre-sold yet unfinished, a proposal that was swiftly rejected by Chinese authorities.

Barclays estimates only 4% of the PBOC facility had been tapped by the end of June.