What: Chinese growth engine shows no sign of going back to full speed.

Why it is important: Global retail depends on how China goes in the coming months.

China's property market continues to experience a downturn, with newly built home prices declining for the 13th consecutive month in June. According to the National Bureau of Statistics, the aggregate price of new homes in 70 mainland cities fell by 0.7% in June, a slight deceleration from May's 0.71% drop. Prices of lived-in homes also decreased by 0.9% from the previous month, compared to a 1% drop in May. This persistent slump has significantly impacted China's economic growth, which expanded by only 4.7% in the second quarter, slower than anticipated. The real estate sector, along with related industries such as home appliances and construction materials, contributes about a quarter of China’s GDP.

Economic analysts highlight the critical role of the property market in China's broader economic health, noting a sharp decline in investment and falling prices. Despite various government measures introduced since late 2023, such as reduced mortgage rates and relaxed home purchase restrictions, the real estate market has not shown significant signs of recovery. These policies have yet to effectively address the overarching issues, as the real estate sector's difficulties continue to deeply affect the broader economy, particularly household wealth which is heavily tied to property.

In more developed cities like Beijing, Shanghai, Guangzhou, and Shenzhen, the second-hand home market has shown some improvement, with a less severe price drop compared to the overall trend. Notably, Shanghai experienced a modest increase in home prices in June, with newly built homes rising by 0.4% and pre-owned flats by 0.5%. This local improvement suggests a potential for market recovery, bolstered by recent government incentives aimed at boosting buyer confidence and stabilizing the market. However, the overall outlook remains cautious, with expectations of further policy easing and incentives over the next year to encourage a more significant market rebound.

China’s June home prices dip for the 13th month, adding weight to stalling economic growth