New home prices across major cities in mainland China made the biggest decline in eight months in June, exacerbating the weak sentiment in the economy and renewing calls for stimulus measures to resume growth.
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A price gauge of newly completed homes in 70 major cities fell 0.3 per cent last month from May, faster than the 0.2 per cent decline the previous month, according to data published by the government’s statistics bureau on Tuesday. That was the worst monthly drop in eight months. June’s prices retreated 3.2 per cent from a year earlier.
The so-called first-tier cities of Beijing, Shenzhen and Guangzhou – often held as the bellwether of China’s economy – bore the brunt of the declines, with prices falling 0.3 per cent last month, compared with the 0.2 per cent drop in May. Shanghai, the mainland’s premier commercial city, bucked the declining trend. Prices fell 0.2 per cent in the second-tier cities comprising provincial capitals, and retraced by 0.3 per cent in the third-tier cities.
Falling prices in Shenzhen, a technology metropolis often touted as “China’s Silicon Valley,” underscored why the city’s largest developer, China Vanke, said it could post a first-half net loss of between 10 billion yuan (US$1.4 billion) and 12 billion yuan this year. The developer, which reported a first-half net loss of 9.85 billion yuan last year, continued to struggle with a significantly lower volume of project deliveries.
The disappointing data weighed on mainland Chinese property stocks on the Hong Kong stock exchange today, with Longfor Group retreating 3.3 per cent to HK$10.10 while China Resources Land fell 2.5 per cent to HK$28.75 in recent trading.
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The number of cities recording a drop in home prices increased in June, which reflected a more urgent need to strengthen the stabilising trend of housing prices, said Yan Yuejin, vice-president of E-House China Real Estate Research Institute in Shanghai.