China New Home Prices Fall At Slower Pace As Support Mounts

(Bloomberg) -- China home prices fell at a slightly slower pace in November, the first improvement in months, as authorities step up efforts to address the property slump. 

New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.37% from October, when they declined 0.38%, National Bureau of Statistics figures showed Friday. The second-hand market worsened, with prices tumbling 0.79%, the most in nine years. 

China’s prolonged housing downturn has weakened the economy and hurt developers that are struggling to repay debts and complete projects. In the latest move to revive demand, authorities relaxed homebuying curbs in Beijing and Shanghai, two of the country’s biggest housing markets. 

“The property market slump largely continued in November as more developer defaults further damped buyer confidence,” said Liu Shui, an analyst at China Index Holdings. “Developers will likely resort to steeper price cuts to boost sales toward the year end.”

Since late August, China has rolled out fresh measures to support the property sector, adding to a slew of moves over the past year mostly aimed at stoking demand for homes. 

Officials in Beijing and Shanghai cut downpayment requirements for first- and second-home buyers, according to announcements Thursday. The cities also changed the definition of so-called non-luxury homes, effectively allowing more residences to qualify for lower mortgage thresholds.

Other cities are allowing deeper discounts to attract buyers. At least two district governments in Suzhou and Huizhou have given tacit consent to developers to lower prices more than 25% from their peaks, local news outlet Yicai reported earlier this week.

Efforts taken so far have largely failed to revive the market, with home sales plunging in 18 of the past 22 months. Buyers remain on the sidelines, spooked by the drop in prices, construction delays and company defaults. 

Industry giant Country Garden Holdings Co. defaulted on a dollar bond for the first time in late October. China Evergrande Group, the world’s most indebted developer, narrowly avoided liquidation this month when a winding-up court hearing was postponed, as it struggles to restructure its borrowings.

There have been signs of stronger government support to ease developers’ funding woes. China’s vice housing minister this week pledged to avoid a cascade of debt defaults. Since last month, Bloomberg has reported authorities created a draft list of developers eligible for bank support and may allow lenders to offer them unsecured loans for the first time. 

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