China's new home prices fall at faster pace amid sluggish economic growth

China's home prices dropped for a second month in July, a further sign of the deepening property downturn that’s weighing on the world’s second-largest economy.

New-home prices in 70 cities, excluding state-subsidised housing, fell 0.23 per cent last month from June, when they slipped 0.06 per cent, National Bureau of Statistics figures showed on Wednesday. Prices slid 0.47 per cent in the secondary market, according to the data.

The declines offer no relief to developers like Country Garden Holdings, which faces a potential default after missing bond payments this month as the housing market sputters.

Risks are also spreading to the financial sector, where a trust company with massive exposure to real estate missed payments on some investment products.

“The slowdown in the property market hasn’t been alleviated in August,” said Chen Wenjing, associate research director at China Index Holdings. “The lackluster market situation may continue in the short term, given it takes some time for local policy support to come out.”

Last month’s price decline was widespread, with 49 cities out of the 70 tracked by the government seeing new-home values drop from a month earlier, the most this year. In the existing-home market, where prices are less subject to government intervention, they fell in all but seven cities.

Shenzhen, a bellwether city in the south, saw prices slide 0.9 per cent in the secondary market, trending closer to the level in June last year after Covid-19 lockdowns halted economic activity.

Chinese developers need a turnaround in sales and prices to alleviate a multiyear credit crisis that’s showing no sign of easing. A potential default by Country Garden, formerly the country’s biggest developer by sales, threatens an even bigger fallout than defaulted peer China Evergrande Group.

The value of residential sales nationwide tumbled 43 per cent in July from June to 654.5 billion yuan ($90 billion), the weakest monthly sales in almost six years, according to Bloomberg calculations based on separate official data.