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China’s housing slump deepens as January prices post steepest annual drop in seven months. Earlier on this here:China house prices continue their death spiral: January -3.1% y/y and -0.4% m/madding a little more now:Summary:China new home prices fall 0.4% m/m, -3.1% y/y in JanuaryAnnual decline steepest in seven months62 of 70 cities report price dropsResale market weakness persists“Three red lines” policy scrappedDeveloper funding stress continuesWeak housing weighs on consumption and growthChina’s housing downturn deepened in January, with official data showing new home prices falling 0.4% month-on-month and 3.1% from a year earlier. The annual decline accelerated from December’s 2.7% drop, marking the steepest contraction in seven months and reinforcing concerns that the sector has yet to find a durable floor.The weakness was broad-based. Of the 70 cities surveyed, 62 recorded price declines, up from 58 in the prior month. The secondary market also remained under pressure. While month-on-month declines in resale prices moderated slightly, year-on-year falls widened sharply, with tier-one city prices down 7.6% and smaller cities registering declines of more than 6%.The property sector, once a central driver of China’s economic expansion, continues to weigh on household wealth and sentiment. Falling home values have constrained consumer spending at a time when policymakers are attempting to rebalance growth and offset external trade risks. Reviving domestic demand remains a core priority, but the persistent housing slump underscores the difficulty of restoring confidence.Authorities have rolled out a range of supportive measures since the crisis began in 2021, including easing home purchase restrictions, lowering down-payment requirements and cutting mortgage rates. More recently, state media reported that regulators had removed the “three red lines” policy — caps on developers’ leverage ratios that were introduced in 2020 and widely seen as triggering a liquidity squeeze across the industry.Despite the policy shift, funding strains remain acute. Many developers are still burdened by high debt levels and face challenges securing fresh financing. The sector is also adjusting away from the highly leveraged expansion model that powered the previous boom.With price declines broadening and annual falls intensifying, January’s data suggests China’s property sector remains a drag on growth and financial stability.
This article was written by Eamonn Sheridan at investinglive.com.
💡 DMK Insight
China’s housing market is in serious trouble, and here’s why that matters for traders: The 3.1% year-over-year drop in new home prices signals a deepening crisis that could ripple through global markets. A declining real estate sector often leads to reduced consumer confidence and spending, which can impact commodities and currencies tied to China, like copper and the Australian dollar. Traders should keep an eye on related assets as this downturn could trigger further sell-offs in markets sensitive to Chinese economic health. Moreover, the ongoing slump could prompt the Chinese government to implement stimulus measures, which might temporarily boost markets but could also lead to longer-term inflation concerns. Watch for any policy announcements in the coming weeks that could shift market sentiment. Technical levels to monitor include key support zones in commodities that often react to Chinese demand, as well as the AUD/USD pair, which could face volatility if the housing crisis worsens. The immediate impact is clear, but the long-term implications could reshape trading strategies across multiple asset classes.
📮 Takeaway
Keep an eye on the AUD/USD and commodities linked to China; any stimulus measures could create volatility in the coming weeks.
