China’s August new home prices fall at fastest pace in 10 months

BEIJING (Reuters) -China’s new home prices fell at the fastest pace in 10 months in August, official data showed on Friday, as conditions in the property sector continued to worsen despite a recent flurry of support measures.

The 0.3% fall month-on-month came after a 0.2% drop in July, according to Reuters calculations based on National Bureau of Statistics (NBS) data. Prices were down 0.1% from a year earlier, after a 0.1% decline in July.

China has in recent weeks delivered a raft of measures to boost home buying sentiment, including easing some borrowing rules, and relaxing home purchasing curbs in some cities.

These policies have given major cities like Beijing a boost in new home sales, but some worry they might be short-lived and could potentially dry up demand in smaller cities.

China’s central bank said on Thursday it would cut the amount of cash that banks must hold as reserves, its second such easing this year.

“The more material risks in the near-term come from some property developers and financial institutions, and a small RRR cut could do very little to help,” said Nomura in a research note on Friday.

Beijing may have to introduce more aggressive property easing measures to deliver a real recovery, analysts say

Authorities may lift almost all restrictions on home transactions, invest more in the urban renovation programme, speed up infrastructure spending and restructure local government debt, said Nomura.

Moody’s (NYSE:) on Thursday cut China’s property sector outlook to negative from stable, citing economic growth challenges, which the rating’s agency said will dampen sales despite government support.

China’s property crisis is seen as one of the biggest stumbling blocks to a sustainable economic recovery, with rising risks of default among private developers threatening to imperil the country’s financial and economic stability.

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