The bad news about China’s embattled property sector keeps on coming, with major player Country Garden struggling to remain solvent, investment sliding again in July, and the first fall in house prices recorded last month for this year.
Official figures on Wednesday showed that China's July new home prices fell for the first month this year. The fall, of 0.2% from June, pushed the yearly movement to a drop of 0.1%.
The year-on-year fall of 0.1% was worse than market forecasts for a rise of 0.3%.
Among China’s 70 biggest cities, prices were lower in both Shenzhen (-2.8% vs -2.4%) and Guangzhou (-1.3% vs -0.8%). But they continued to rise in Beijing (3.5% vs 3.5%), Chongqing (0.5% vs 0.6%), Shanghai (4.5% vs 4.8%), and Tianjin (0.5% vs 0.2%).
Meanwhile, shares in the troubled property developer Country Garden hit a new all-time low of 78 Hong Kong cents in early trading on Wednesday before bouncing in the afternoon to trade around 82 HK cents.
Markets in Hong Kong and mainland China were weaker on Wednesday, having failed to get any bounce from the second rate cut from the People’s Bank of China since June and expectations of a cut to a more important indicator rate next Monday.
The Hang Seng Index in Hong Kong was down more than 1.3% in afternoon trading, while the Shanghai market was down half a percent, and the CSI 300 index has shed more than 0.6%.
The weak house price data didn’t help confidence and added to the gloom from the weak investment data for property from the July release of figures by the National Bureau of Statistics.
Investment in the property sector fell for the 17th month in a row in July. Investment in the sector dropped 8.5% in the first seven months from the same period a year earlier, after sliding 7.9% in January-June, according to the National Bureau of Statistics (NBS) on Tuesday.
Property sales by floor area in China fell 6.5% in January-July from a year earlier, compared with a 5.3% drop.
China’s house sales data have been restricted from release since last September, and on Tuesday the NBS said it would no longer release the youth unemployment data.
