China home sales slump drags on as deflation eats into incomes
BEIJING - China's residential property sales continued to fall in May, signalling the real estate slump is still weighing on an economy that's under pressure from deflation and trade tensions.
The value of new-home sales from the 100 largest property companies slid 8.6 per cent from a year earlier to 294.6 billion yuan (S$52.8 billion), according to calculations based on preliminary data from China Real Estate Information Corp. That follows an 8.7 per cent decline in April.
A truce on US tariffs has done little for the world's second-largest economy as falling prices erode corporate profits and employee incomes. That has led to suppressed demand for housing purchases, just as the effects of a stimulus blitz last September start to wear off.
'China's real estate sector hasn't reached a bottom yet,' Wang Ying, a managing director at Fitch Ratings, said last week. 'The majority of residential inventory sits in smaller cities, meaning an inflection point of the sector would only come from a broad rise of income and wealth.'
The property market, accounting for roughly a quarter of economic activity at its peak, is where some 70 per cent of China's household wealth is invested.
China's top officials have said that a recovery in the property sector will help to shield the country from the US tariff hikes. Yet top authorities have taken a patient approach on real estate policies, seeking the right time to issue more support. In late May, officials reiterated existing programmes for the real estate sector, including urban renewal initiatives.
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