China's Real Estate Market Plummets: Analysis of the Latest Data Official Data from the National Bureau of Statistics

The National Bureau of Statistics of China recently released data for May 2024 regarding the sales prices of residential properties in 70 major cities. The data reveals a grim picture of the current real estate market:

City-Specific Price Changes

• Out of 70 cities, only two saw a month-on-month increase in house prices. Shanghai had the most significant growth at 0.6%.

• The prices in Beijing, Shanghai, Guangzhou, and Shenzhen decreased by 1.1%, 0.6%, 1.4%, and 0.8%, respectively.

Chief Statistician Wang Zhonghua from the Urban Division of the National Bureau of Statistics explained: "In 70 large and medium-sized cities, the sales prices of commercial residential buildings fell month-on-month, with the year-on-year decline slightly expanding."

The comparison of housing prices from May last year shows that the rate of decline has expanded. Compared to April this year, the rate of decline is still increasing.

Introduction of the "5.17 New Policy"

On May 17, 2024, the People's Bank of China introduced new measures to rescue the real estate market, known as the "5.17 New Policy."

This policy aimed to further relax the purchasing restrictions and significantly lower mortgage loan interest rates for buyers.

Despite these efforts, the latest data shows that the decline in housing prices has continued:

In May, new home prices in first-tier cities fell by 0.7% month-on-month, with the decline rate expanding by 0.1 percentage points compared to April.

Declines in Second and Third-Tier Cities

Second—and third-tier cities saw declines of 0.7% and 0.8%, respectively, with the decline rate expanding by 0.2 percentage points in both cases.

• For second-hand housing, prices in first-tier cities fell by 1.2% month-on-month, with Beijing, Shanghai, Guangzhou, and Shenzhen falling by 1.2%, 1.3%, 1.6%, and 1.0% respectively. Second-tier cities saw a 1.0% drop, and third-tier cities saw a 0.9% drop.

• Only Shanghai saw a slight increase in new home prices, rising by 0.6%. All other cities experienced declines in both new and second-hand housing prices.

Year-on-Year Decline in New Home Prices

Compared to May last year, the decline is more pronounced:

• New home prices in first-tier cities fell by 3.2%, with second and third-tier cities seeing declines of 3.7% and 4.9%, respectively.

Year-on-Year Decline in Second-Hand Home Prices

• Second-hand home prices in first-tier cities dropped by 9.3%, with Beijing, Shanghai, Guangzhou, and Shenzhen declining by 8.6%, 7.9%, 11.4%, and 9.2% respectively. Second and third-tier cities saw declines of 7.5% and 7.3%.

Guangzhou, for instance, saw a significant drop in housing prices:

• New home prices fell by 8.3% compared to last year.

• Second-hand home prices fell by 11.4%.

Effects of Relaxed Purchase Restrictions

• The prices have continued to fall despite fully relaxed purchase restrictions in Guangzhou, including no limits on properties over 120 square meters.

Overall Market Trend

• The data from the National Bureau of Statistics shows that the real estate market in China is experiencing significant declines despite government efforts to stabilize it. This trend indicates a continued and possibly accelerating downturn in the market. The next article will provide further analysis.