Mainland property slump deepens

Bloomberg

China's residential slump deepened in August, as expectations of a further drop in new-home prices hampered the country's efforts to cushion the downturn.

The value of new-home sales from the 100 biggest real estate companies fell about 26.8 percent from a year earlier to 251 billion yuan (HK$275.9 billion), faster than the 19.7 percent decline in July, according to preliminary data from China Real Estate Information Corp.

The accelerating slide shows the waning impact of the latest rescue package unveiled in May. At least 10 city governments have loosened or scrapped new-home price guidance to let market demand play a bigger role, a move that is expected to drive more real estate companies to cut prices.

The sector continues to be a drag on China's economy, which needs more stimulus to meet the government's 5 percent growth target this year, according to Bloomberg Economics. The crisis has weighed on everything from the job market to consumption and household wealth over the past two years.

China has been considering a new funding option for local governments to buy unsold homes to prop up the market, people familiar said in August. The latest proposal would allow local governments fund their home purchases via so-called special bonds, the people said.

The country had 382 million square meters of unsold new homes as of July, equivalent to about the size of Detroit, according to the latest official data.