China new home prices edge down in June for second consecutive month

© Reuters. FILE PHOTO: Under-construction apartments are pictured from a building during sunset in the Shekou area of Shenzhen, Guangdong province, China November 7, 2021. REUTERS/David Kirton/File Photo

BEIJING (Reuters) – New home prices in China edged down in June from the previous month, marking a second straight month of declines, and housing sales are likely to remain weak over the summer when demand is usually at a low ebb, according to a private survey.

The average price of new homes in 100 cities fell 0.01% in June, the same-sized decline that was seen in May, data from the China Index Academy showed on Saturday.

Forty-five cities reported price decreases.

For the first half of the year, average prices were up 0.01% from the same period a year earlier.

“In the first quarter, market confidence, driven by a concentrated release of pent-up demand, gradually returned and prices appeared to be recovering,” the real estate research firm said.

“In the second quarter, the pace of market recovery slowed and there was not enough momentum for prices to rise,” it added.

China’s property sector has over the past two years been thrust into a severe debt crisis – initially triggered by government moves to rein in ballooning debt – with many developers defaulting on payments as they struggle to sell apartments and raise funds.

Although local governments have rolled out hundreds of measures to support the sector, and the scrapping of harsh COVID curbs in December has helped somewhat, positive investor sentiment towards the sector has been short-lived.

“If policy support is limited, it will be difficult for home buyer confidence to improve,” China Index Academy said.

The property sector accounts for a roughly a quarter of China’s economy.