China home prices drop at faster pace as stimulus calls mount

China’s home prices fell at a faster pace in June, underscoring growing speculation for additional measures to revive the property market.New-home prices in 70 cities, excluding state-subsidised housing, dropped 0.27% from May, the most in eight months, National Bureau of Statistics figures showed Tuesday. Values of second-hand homes fell 0.61%, the biggest decline since September.

China’s prolonged housing downturn is stifling efforts to boost consumer demand and shore up the economy as exports remain under pressure from trade tensions with the US. Calls for further policy support for the residential market have grown as the effects of a stimulus blitz last September wear off.
Preliminary figures for June show “a clear trend of market weakening,” UOB Kay Hian analysts Jieqi Liu and Damon Shen wrote in a report last week. “We see a higher likelihood of policy support being announced during the July Politburo meeting.”Investors are closely watching for further signs of policy support. A Bloomberg Intelligence gauge of Chinese developer stocks jumped late last week on speculation that more stimulus is in the works.

Premier Li Qiang pledged to end the real estate decline at a State Council meeting last month. When China’s top leaders voiced such a policy target last September, a stimulus package ensued.

Still, some economists expect Beijing to hold off on major support measures for now, to preserve policy flexibility in case tensions with Washington resurface after a temporary deal expires in mid-August.

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