China's New Home Prices Fall 2.8% Year-on-Year in July Amid Persistent Property Slump

China's housing market continued its downward trend in July, with new home prices across 70 major cities declining by 2.8% year-on-year, marking the 25th consecutive month of contraction. This persistent slump reflects broader economic challenges and weak consumer confidence, despite government efforts to stabilize the sector.

According to data shared by investor Liqian Ren on social media, new commercial residential sales prices in July saw varying declines across city tiers. "7月份，1、2、3线城市新房同比价格下降1.1%、2.8%、4.2%," Ren stated, quoting official figures. While the year-on-year decline in Tier 1 cities narrowed slightly to 1.1%, Shanghai notably bucked the trend with a 6.1% increase, contrasting with drops in Beijing (-3.6%), Guangzhou (-4.6%), and Shenzhen (-2.2%).

The downturn was more pronounced in the resale market. Ren's post highlighted that "7月份，一线城市二手住宅销售价格同比下降3.4%，降幅比上月扩大0.4个百分点," indicating an accelerating decline in major cities like Guangzhou, which saw a 6.0% drop. Used home prices in Tier 2 and Tier 3 cities fell by 5.6% and 6.4% respectively.

The property sector's woes are deeply intertwined with China's overall economic slowdown. Property investment plunged by 12% in the first seven months of the year, with residential housing investment dropping nearly 11%, according to Reuters. This has significantly impacted consumer spending, as a large portion of Chinese household wealth is tied to real estate.

Policymakers have implemented measures such as "保交楼" (ensuring the delivery of pre-sold homes) and relaxed purchasing rules in some areas to stimulate demand. However, these efforts have yielded limited success. Liqian Ren criticized the current approach, stating, "长痛不如短痛，什么保交楼，都是无脑的经济学家给的政策，继续用那帮人，就继续钝刀割肉," advocating for a more decisive, albeit painful, market correction. Ren maintains that housing prices need to fall until the rent-to-price ratio reaches at least 3%, or ideally 3.5%, for a potential turnaround. Analysts suggest further policy support is urgently needed to restore confidence and prevent a prolonged drag on the economy.