China's Property Market Plunges: Experts Predict Continued Slump

China's new home prices fell at their fastest rate in nine years in July. Support policies failed to stabilize prices. The continuous housing market slump has significantly impacted the economy and consumer confidence. Analysts suggest more robust policy measures may be needed to halt the decline.

China's new home prices dropped at an unprecedented pace in nine years in July, as a series of support policies failed to stabilize the market and restore confidence in the floundering property sector. This prolonged slump has significantly impacted the world's second-largest economy and its consumers, with some analysts deeming Beijing's ambitious 5% GDP target for 2024 as overly optimistic, even as other economic indicators have steadied.

The latest data shows new home prices fell 4.9% from a year earlier, marking the steepest decline since June 2015 and surpassing the 4.5% drop recorded in June, according to Reuters' calculations based on National Bureau of Statistics (NBS) data. Initial reports indicated a 5.0% fall due to automated rounding. Analysts at ING highlighted the ongoing need for more policy support to stabilize the property market's decline.

Beijing has ramped up efforts to support the sector through measures like reduced mortgage rates and lowered home buying costs. While such policies have a limited effect due to external economic downturns, says Song Hongwei of Tongce Research Institute, property developers are resorting to unusual promotions to offload unsold homes, such as offering flight time towards a pilot's license and partial ownership of a jet as incentives.