Beijing tones down housing speculation warning amid sales woes

China vows to step up stimulus measures to bolster recovery in the second half of 2023 at the July politburo meeting of the Communist Party this week.

The readout of the official meeting on the nation’s economy is considered more dovish than expected. In particular, Chinese President Xi’s overriding slogan “Property is for living in, but not for speculation” was notably omitted from the communique. The shift in rhetoric is rarely seen because the warning had been consistently repeated by officials since 2016 when it appeared for the first time as part of efforts to cool the overheating sector.

The toned-down warning gives a crucial signal that the country is determined to bail out the battered sector to boost the slower-than-expected recovery. "It seems the government has recognized the importance of policy change in this sector to stabilize the economy," one analyst said.

This year, Chinese housing sales have remained stubbornly weak. Around 70 cities witnessed houses sold at lower prices in June, and second-hand houses have fallen for the past two months in a row, according to the official data. And prices in large cities decline more than in second/third-tier cities, particularly in Shanghai, the Asian financial hub.

Declining property prices are due to a glut, the second-largest economy admitted. Policymakers said the contraction comes after demand and supply in the home market have seen “fundamental changes.”

Over the last two years, China's property sector has been thrown into a serious financial crisis, initially triggered by government moves to rein in ballooning debt, with many developers defaulting on payments as they struggled to sell apartments and raise funds.