China's New Home Prices Plummet at Fastest Pace in 11 Months

China's new home prices fell at the fastest pace in 11 months in September, exacerbating the property sector's drag on broader economic growth. This decline is a worrying trend as policymakers struggle to revive the flailing market.

Persistent property market weakness is weighing on consumer confidence and sapping household spending, building the case for policymakers to step up support to shore up growth amid global trade threats.

New home prices fell 0.4% month-on-month, following a 0.3% fall in August, according to calculations by Reuters based on National Bureau of Statistics data. Year-on-year, prices fell 2.2% in September versus a 2.5% drop in August.

September and October are traditionally the peak season for property buying as developers launch sales campaigns to attract consumers during national holidays. However, a prolonged property downturn since 2021, marked by many developers failing to repay debt and complete presold homes, has soured consumer sentiment.

Of the 70 cities surveyed by the NBS, 63 reported month-on-month declines in home prices, and 61 recorded year-on-year falls. Secondary home prices slid 3.2% year-on-year in tier-one cities, 5.0% in tier-two, and 5.7% in tier-three. Separate data shows faster falls in property investment and sales in January-September.

Once a key driver of economic growth in China, the property sector has turned into a significant drag. China has in the past two years repeatedly pledged to stabilize the real estate market and rolled out numerous policies, including mortgage rate cuts and a campaign to accelerate urban village redevelopment.

Local authorities have also eased curbs for buying homes to encourage consumption. However, the property market remains weak, and analysts warn it could take a year or more for prices and investment to recover.

Nomura analysts said in a report last week that the government would need to 'more seriously address the fallout from the property market collapse' in its new five-year plan for 2026 to 2030. The elite Central Committee of China's ruling Communist Party will hold a closed-door meeting from Monday to Thursday to discuss, among other things, the country's 15th five-year development plan.

The property market's downturn is not just a local issue; it has broader economic implications. As the sector struggles, it affects various industries and consumer spending, further complicating the economic landscape. Policymakers are under pressure to implement more effective measures to stabilize the market and restore consumer confidence.