China on the brink with Xi Jinping on the backfoot as housing market in freefall
China has been grappling with an existential crisis at the heart of its housing market despite multiple attempts from the central government to stimulate a rebound.
The housing crisis rocking China is showing no signs of improvement as home prices in May fell even faster than the month before in the latest data.
According to China's National Bureau of Statistics, the price for new homes across 70 Chinese cities dropped by 0.71 percent compared to April.
The fall marked the biggest drop Xi Jinping's Government has recorded since October 2014 - the last time the Chinese housing market experienced a concerning downturn.
The data showed that the value of existing homes had also dropped by one percent last month.
Overall, prices of new homes have plunged 4.3 percent year-on-year, while existing homes dropped by 7.5 percent.
The housing sector has traditionally been a major driver of investment in China, accounting for over 25 percent of China's overall economic activity.
But the market has been struggling for the past four years, and the price drop is weighing heavily on the People's Republic's attempts to recover from the coronavirus pandemic fully.
President Xi introduced a new rescue package last month in a desperate bid to salvage the sector and address the slump in prices.
Among the measures introduced were a relaxation of mortgage rules as well as a request to local governments to purchase unsold homes to turn the properties into social housing.
The People's Bank of China joined in the rescue missions stating that it would provide 300 billion yuan (£32.6 billion) in loans via a new national scheme.
However, analysts have warned the package is likely to do very little to help the struggling sector, and could effectively dampen buying sentiment in smaller Chinese cities.
DON'T MISS:
Archaeologists left speechless after uncovering shipwrecks [REPORT]
WW3 fears explode after warship collides with key ally in South China Sea [INSIGHT]
Xi in 'desperate' bid to woo global investors as hostile tactic backfires [ANALYSIS]
Economist Xu Tianchen said: "The latest policies have boosted the second-hand home market in major cities but the liquidity problem of real estate enterprises has not yet been eased.
"And the confidence crisis in the new-home market has not yet been resolved."
The Chinese Cabinet has already signalled that they are prepared to reduce housing inventory should the measures fail to deliver.
Officials have been reportedly urged to keep an "open mind" and think about possible new policies to help stabilise the market.
The Cabinet said: "We should steadily and concretely push forward the work of digesting and revitalising existing homes and land with an open mind and broadened thinking."
The housing crisis has been a reflection of China's ongoing financial struggles as the country's industrial output growth also showed signs of a slowdown.
In May, the figure recorded was 5.6 percent, down from 6.7 percent the same month in 2023 and down 0.4 percent from what economists had predicted.
