China's home prices are falling dramatically despite rescue package

Five charts to start your day

For decades, China's property market was the engine of its economic miracle. Gleaming skyscrapers and vast housing estates sprouted across the country, symbols of China's rapid urbanisation and growing prosperity. Millions of ordinary Chinese poured their life savings into bricks and mortar, believing property was the surest path to financial security. But now, this once-unstoppable juggernaut is sputtering.

China's property market is facing a severe downturn, with far-reaching implications both at home and abroad. While official data suggests a modest decline, reports from estate agents paint a more concerning picture, with some areas experiencing price drops of up to 25 percent. This discrepancy raises questions about the reliability of official figures and their impact on market perceptions. Nevertheless, these two charts from Reuters and Bloomberg – both based on official data – are still shocking.

Source: Reuters

Source: Bloomberg

The crisis is affecting more than just the property sector; it's sending shockwaves through the entire Chinese economy. Despite the government's extensive efforts to stabilise the market, home prices continue to fall at an alarming rate. New developments are struggling to attract buyers, and existing home values are plummeting.

In response, some developers have resorted to unusual marketing tactics, such as offering extravagant incentives to potential buyers. Meanwhile, the government is exploring various strategies, including converting unsold properties into affordable housing.

This situation has made investors increasingly nervous, particularly those with stakes in troubled development companies. The impact is being felt beyond China's borders, with international markets closely watching for signs of a wider economic slowdown.

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