China home price slump drags on despite revival efforts

New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.71% from August, in line with a 0.73% decline a month earlier, National Bureau of Statistics figures showed October 18. Values of used homes fell 0.93%, following a 0.95% decline a month earlier.

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The slump underscores Beijing’s struggle to contain the property downturn at a time when deflationary pressure is adding to the economic gloom. China on October 17 pledged to nearly double the loan quota for unfinished residential projects to 4 trillion yuan ($562 billion) and planned to renovate 1 million homes in older, rundown dwellings in large cities. The plans still underwhelmed, with some analysts calling them “incremental.”

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That follows a pledge from top leaders in late September to stem the decline of the real estate market, in what Morgan Stanley called its most determined vow since the industry downtrend started more than three years ago.

The property sector will continue to be a drag on the economy “due to the negative impact on household wealth, of which up to 70% are in properties,” Woei Chen Ho, an economist at the United Overseas Bank Ltd., said before the data release.

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