Key facts
- New home prices fell 0.1% month-on-month in September.
- Year-on-year, new home prices dropped 2.8% in September.
- Policymakers unveiled policies to subsidize mortgage interest payments for eligible homebuyers in smaller cities.
China's new home prices declined again in September, marking over three years without a monthly or annual increase, indicating that policy support has not yet stimulated broad housing demand. Prices dropped 0.1% month-on-month, mirroring August's decline, and fell 2.8% year-on-year, a slight improvement from August's 3.0% drop. The prolonged housing market downturn poses one of China's most significant economic challenges, impacting consumer confidence and local government revenues. While prices in major cities showed signs of stabilization, likely due to eased restrictions and incentives in Shanghai, smaller cities experienced continued month-on-month and year-on-year price falls. In response, the central bank and financial regulator introduced policies in late September to subsidize mortgage interest payments for eligible homebuyers in smaller cities, capping eligible home purchase prices at 1.5 million yuan. The market's struggles continue to hinder domestic demand, as falling home values encourage homeowners to save rather than spend. Separately, property investment and home sales contracted at a faster pace in the first nine months of the year.