China's property investment falls to most in July

BEIJING China's property investment fell further in July, down the most this year, while new construction starts suffered their biggest fall in nearly a decade, due to tight funding conditions and weak sentiment.

Since the summer of 2020, China's property market has suffered from a prolonged crisis due to cash-strapped developers defaulting on loans and bond repayments, leading to unfinished projects. The new property investment by developers has been hampered by the wary buyer sentiment.

According to the National Bureau of Statistics NBS, property investment fell 12.3 per cent in July from a year-on-year low of 9.4 per cent in June.

In January-July, property investment fell 6.4 per cent from a year earlier, the most since March 2020.

The recovery may be gradual and bumpy, a significant improvement in developer funding conditions may require more and broader easing, and there is a need for more policy support to restore confidence in the property sector and contain potential tail risks, analysts at Goldman Sachs said in a research note.

In January-July, new construction starts fell 36.1 per cent, extending from a 34.4 per cent drop in the first half.

Since 2020, cash-strapped real estate firms have suffered from tight credit conditions.

According to the NBS data, loans granted by domestic banks dropped 36.8 per cent, while capital raised from abroad plunged 200 per cent in July.

The central bank said that in July, mortgages fell to 121.7 billion yuan $18.00 billion from 848.2 billion in June.

New home prices fell 0.9 per cent on July, the fastest pace since September 2015, and extending a 0.5 per cent decline in June, according to NBS data.