China's New Home Prices Fall 4.1% in April, Deepening Property Slump

China’s housing market downturn deepened in April as new home prices fell for a tenth consecutive month, with declines accelerating in smaller cities, signaling that a series of government support measures have yet to stabilize the crisis-hit sector.

"There’s still a gap between these signals and a real pickup in actual buying power across the market, or a rapid recovery driven by that demand," Zhang Xiaoduan, a services head for real estate firm Cushman & Wakefield, said.

New commercial residential home prices in first-tier cities, including Beijing and Shanghai, fell 2.1 percent year-on-year, according to data released by the National Bureau of Statistics (NBS). Prices in second-tier cities dropped 3.3 percent, while third-tier cities saw the sharpest decline at 4.1 percent, a faster rate of decline than the previous month. The persistent fall in prices highlights the immense challenge Beijing faces in reviving a sector that once accounted for nearly a third of its economic activity.

The prolonged slump has shattered homeowner confidence and curbed demand for global commodities like iron ore and copper, creating headwinds for the global economy. For millions of Chinese households, where homeownership is deeply ingrained culturally and represents the primary store of wealth, the ongoing crisis has led to a painful reassessment of property as a guaranteed investment.

A Crisis of Confidence

The core of the issue is a widespread reluctance among potential buyers to take on new debt amid an uncertain economic outlook. Despite lower property prices, many citizens are hesitant to enter the market due to concerns over job stability and income growth.

"It isn’t the case that people aren’t unwilling to buy," said Mandy Feng, a 30-year-old photographer in the southwestern city of Kunming. "But when everyone is struck by unstable income and isn’t making a lot of money, no one dares to get a mortgage." This sentiment is echoed by prospective buyers across the country, who are choosing to remain on the sidelines, further dampening sales and creating a vicious cycle of falling prices and weak demand.

From Boom to Bust

For decades, China's property market was a seemingly unstoppable engine of growth, creating a homeownership rate of 90 percent that is unfathomable in the West. This was fueled by rapid economic liberalization, strong cultural preferences, and a belief that property values would only rise. However, the boom was built on a mountain of debt.

In 2020, the central government moved decisively to rein in the freewheeling sector, imposing strict rules on developer borrowing. The move triggered a wave of defaults, most notably by behemoth Evergrande, which was ordered to liquidate earlier this year, and has left other major firms like Country Garden and Vanke in distress. The crackdown left buyers with unfinished apartments and homeowners watching the value of their properties plummet.

The current generation's perspective on homeownership may be shifting permanently. Many younger Chinese, having witnessed the market's turbulence, are now more cautious and open to renting, a trend that could signal a long-term structural change. "China’s market is gradually becoming more similar to Western countries, where renting might become more mainstream in the future," said Zoe Zhang, a 35-year-old mother in Beijing.

This article is for informational purposes only and does not constitute investment advice.