Liangping Gao and Clare JimReutersCamera IconChina’s new home prices fell for the fourth month in August, a private survey showed. (AP) Credit: AP
Real estate agents have been calling Daisy Wu non-stop to get her to buy an apartment in the southern Chinese city of Shenzhen, but the 28-year-old said she was too worried about the slowing economy to consider making a purchase.
Wu’s concerns belie a raft of measures rolled out by the Beijing government this week to revive the economy and target the deepening crisis in its massive debt-riddled property sector which has been on the decline since 2021.
The measures include lower mortgage rates for first-time homebuyers, but analysts warn that like Wu, the sentiment among many Chinese is too weak for these moves to put a floor under the world’s largest asset class, where roughly 70 per cent of household wealth is invested.
“The loosening of mortgage rules doesn’t relieve me of any stress,” said Wu, who works for a pharmaceuticals firm. “Companies are laying people off or even shutting down. My boyfriend and I are too afraid to buy.”
The slump in the property market is driven by more fundamental factors than the cost of borrowing, including broader debt worries in the economy, white-collar workers taking pay cuts, and a demographic downturn.
China’s new home prices fell for the fourth month in August, a private survey showed on Friday.
“Although China has cut mortgage rates a few times since 2022, households do not seem to bother,” Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, said in a note.
Leading developer Country Garden is scrambling to avoid default and fears of contagion to other property firms are mounting, creating an environment that does little to boost buyers’ confidence.
Moody’s said on Thursday it expects a