China New Home Prices Fall 0.25%... "Real Estate Slump, Economic Risk Factor"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] As the repercussions of the Evergrande crisis continue, the decline in new home prices in China has widened.

Bloomberg reported on the 15th that an analysis of data released by the National Bureau of Statistics of China showed that new home prices in 70 major cities fell by 0.25% compared to the previous month.

In September, new home prices fell by 0.08%, marking the first decline in six years since April 2015, and the decline deepened in October.

The contraction of the real estate industry is emerging as the most serious challenge to China's economy in the second half of the year.

Zhang Ziwei, chief analyst at Pinpoint Asset Management, pointed out, "The downturn in the real estate sector is a key risk factor for macroeconomic outlooks over the coming quarters."

If the downward trend in new home prices solidifies, consumers will inevitably be more reluctant to purchase new homes due to concerns over future asset value depreciation.

This could further worsen the liquidity problems of real estate companies like Evergrande, which need to secure funds through normal home sales amid a severe liquidity crisis.

Although Evergrande narrowly avoided default by paying bond interest by the deadline, since last month, real estate companies such as Huayangnian, Xinli, and Dangdaizhiye have already entered default status, rapidly heightening fears of a chain default.

In response, Chinese authorities appear to be partially assisting real estate developers in alleviating liquidity crises.

While maintaining the overall policy stance of regulating the real estate market, it is reported that state-owned banks have been instructed to offer flexible lending.

This content was produced with the assistance of AI translation services.