Investing.com– Chinese house prices fell in July, data showed on Wednesday, extending their decline this year as a post-COVID economic recovery in the country slowed further and as several major property developers flagged slowing sales.
fell 0.1% in July from the prior year, data from the National Bureau of Statistics showed. They slid 0.2% from June, according to Bloomberg calculations.
The data highlights increasing pressure on the property market, as major developers struggle with slowing sales, declining profits and a severe cash crunch.
The property sector has been on a nearly three-year decline following a string of high-profile defaults, and as Chinese economic conditions worsened due to the COVID-19 pandemic.
While Chinese officials have announced a string of supportive measures for the sector- most recently an unexpected interest rate cut by the People’s Bank on Tuesday- investors and home buyers have remained largely wary of the space.
Concerns over the property market came to a head in recent weeks after Country Garden Holdings (HK:)- the country’s biggest real estate developer- warned of a massive loss for the first half of 2023, and also flagged some difficulty in meeting its debt obligations.
A potential default by Country Garden would be the biggest default in China’s property sector since China Evergrande, and could deal a dire blow to a sector that is already struggling with worsening economic conditions. The firm recently suspended trading in 11 onshore bonds, while its offshore bonds and shares slumped to a record low.
Smaller developer China Jinmao Holdings (HK:) also flagged an 80% drop in its first-half profit, while investors also fretted over potential contagion from a Country Garden default.
The Chinese government is now expected to roll out more stimulus measures, and potentially cut interest rates further in the coming months to improve growth. Wednesday’s data also caps off a string of weak economic readings for July, which showed little improvement after a dismal second quarter.