Buried in last week’s data drop from China’s National Bureau of Statistics was the usual monthly update from the black hole of the country’s economy: property.
Despite two rate cuts, two easings in the level of reserve ratios at banks large and small, and a number of moves to make it easier to buy homes and apartments—and to try and give buyers the confidence to settle on existing purchases—China’s property sector continues to fall deeper into the hole.
This will still be the biggest issue confronting the government led by President Xi Jinping in 2024, as he reportedly sees no need to change next year’s GDP growth target from the 5% or so for 2023.
The slide in property prices remains uneven. Beijing is still positive because, like all major sources of political power, there’s demand for accommodation and a desire by the ruling class to keep voters in their immediate sphere of influence happy and prosperous.
But in the economic heartlands around Guangdong and Shenzhen, prices are weakening—where stricken giants like Evergrande and Country Garden did a lot of business, dragging down sales and cutting the inflow of much-needed financing.
NBS data late last week revealed that property sales by floor area in China fell 8.0% year-on-year in the 11 months from January to November, compared with a 7.8% slump in the first 10 months of 2023.
Property investment in the first eleven months of 2023 fell 9.4% from a year earlier, after dropping 9.3% in January-October, according to the NBS. New construction starts measured by floor area tumbled 21.2% year-on-year, after a 23.2% slide in the first ten months. And funds raised by China’s property developers were down 13.4% year-on-year after a 13.8% fall in January-October.
National Bureau of Statistics data showed that China’s new home prices dropped by 0.2% year-on-year in November 2023, marking the fifth consecutive month of decline, as demand remained sluggish despite a growing list of government measures to boost demand. November’s fall was also the steepest decrease since April, as prices shrank at a faster pace in Shenzhen and Guangzhou but rose in Beijing, Tianjin, and Shanghai.
On a monthly basis, new home prices fell by 0.3% in November, the same pace as in October, also marking the fifth consecutive month of decline. All this helps explain the continuing weak investment performance across the economy: China’s fixed-asset investment increased by 2.9% in the first eleven months of 2023, the same pace as in October. That’s almost half the 5.1% growth seen in 2022 when Covid restrictions were in place.