China home price slump drags on despite revival efforts

Home prices in China declined in September at a rate that was nearly identical to that of the previous month. This indicated the nation's attempts to stabilise its real estate market might not be sufficient.

China promised greater assistance for the faltering real estate market and indebted local governments to increase economic support significantly. However, policymakers have yet to persuade economists that their efforts to combat deflation are sufficient.

The latest data shows China's economy grew at its slowest pace in one-and-a-half years. New-home prices in 70 cities, excluding state-subsidised housing, fell 0.71 per cent from August. That is roughly matching a 0.73 per cent dip the previous month. Used house values are down 0.93 per cent after declining 0.95 per cent the previous month.

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While Chinese stocks have surged on the stimulus blitz, economists are not convinced these measures could bring the economy out of deflation. There was little indication that Chinese authorities felt any urgency to ramp up consumption. This is essential to reflating the economy and putting it on a more positive growth trajectory.

At a time when deflationary pressure is making the economy even more dire, Beijing is finding it difficult to stop the property sector's slide.

On Thursday, China announced plans to restore one million houses in ageing, dilapidated buildings in major cities and nearly doubled the lending cap for unfinished residential projects to 4 trillion yuan or $562 billion.

Due to the schemes' lacklustre performance, investors sought out more robust policies.