(Bloomberg) -- China’s new-home prices fell at a quicker pace in February, worsening for the first time in six months despite the country’s latest efforts to prop up the market.
Most Read from Bloomberg
-
ICE Eyes Massive California Tent Facility Amid Space Constraints
-
Washington, DC, Region Braces for ‘Devastating’ Cuts from Congress
Prices in 70 cities, excluding state-subsidized housing, dropped 0.14% from January, when they slid 0.07%, National Bureau of Statistics figures showed Monday. Values of used homes fell 0.34%, the same pace as a month earlier.
Continued price declines may dampen hopes that the real estate market is bottoming out, even as sales show signs of improvement. Policymakers are struggling to contain the downturn at a time when deflationary pressure and a trade war are adding to the economic gloom.
“Markets should not forget that China’s property collapse is not yet over,” Lu Ting, chief China economist at Nomura Holdings Inc., wrote in a March 10 report. “From the high-frequency data, the property sector appears to be losing some momentum.”
In a precarious sign, used-home prices dropped 0.1% from January in top-tier cities, falling for the first time since authorities introduced a major stimulus package last September. Such prices are widely seen as a bellwether because they face less intervention by local governments and sales of secondhand homes have surpassed those in the primary market.
Click here for more housing figures
Residential sales dipped 0.4% in the first two months from a year earlier, improving from a 17.5% drop last year, other data showed Monday. Meanwhile, retail sales and industrial production rose more than economists estimated.
“China’s recovery may prove short-lived due to the economy’s underlying structural challenges,” Zichun Huang, China economist at Capital Economics, wrote in a note on Monday. “In particular, after a few months of recovery, home sales started to fall again at the start of the year.”
Year-on-year price declines eased slightly. New-home prices fell 5.22% in February, compared with January’s 5.43% drop, the statistics bureau said. Existing-home values slid 7.53%, versus 7.8% in January.
‘Property Consumption’
On Sunday, China’s latest guidelines to revive household spending repeated measures to “better cater for property consumption demand.”
“Reiteration of these measures in recent different policymakers’ key meetings will lead to faster policy implementation,” said Raymond Cheng, head of China property research at CGS International Securities Hong Kong. “That will restore homebuyers’ confidence and help boost property sales eventually.”