House Prices in China Continue to Decline in November

SadaNews - House prices in China continued to decline in November, marking the latest chapter in a downward trend that has persisted for years, prompting policymakers to pledge intensified efforts to address it.

Data released by the National Bureau of Statistics on Monday showed that new home prices in 70 cities, excluding government-subsidized housing, fell by 0.39% compared to October, after a decrease of 0.45% the previous month, marking the largest drop in a year. Additionally, prices for existing homes, which are subject to less government intervention, dropped by 0.66%, the same rate recorded in the previous month.

These figures highlight the worsening problems in the Chinese real estate sector, where a prolonged recession lasting four years has burdened sentiments and become a barrier to economic growth.

The increasing financial troubles of "China Vanke Co," considered a benchmark for the sector's performance, have raised alarming questions about the potential for another painful debt crisis in this sector.

Analysts from Citigroup, led by Griffin Chan, reported last week that the housing market is likely to face a "harsh reality" in 2026. The American bank expects nationwide sales to drop by an additional 11% in value next year unless liquidity improves.

Increasing Concern Among Officials

The ongoing real estate crisis has fueled a growing sense of concern among Chinese officials, who are considering measures such as mortgage support and tax exemptions, according to Bloomberg.

During a major economic meeting held last week, policymakers committed to encourage the acquisition of existing housing inventory, a step widely deemed essential to reduce the excessively high inventory levels.

Recently, officials also ordered two private data collection agencies to freeze the release of housing sales data. Authorities in Shanghai imposed restrictions on publications expressing a pessimistic outlook on the real estate sector.

Warnings of Further Decline

John Lam, head of real estate research in China at UBS Group, stated in an interview before the release of the latest data that home prices will continue to decline for at least another two years. Lam, who was previously optimistic about a sector recovery, noted that values of existing homes in major cities have fallen by more than a third compared to peak levels.

For its part, Fitch Ratings warned in October that new home sales in terms of area might decline by an additional 15% to 20% before the sector stabilizes. The agency indicated that these bleak forecasts suggest that distressed real estate-related debts at banks will likely remain "high" over the next year.