- Westpac Global Economics
China's new home prices declined for the eighth straight month in April from a year earlier, but remained flat from March, fuelling hopes that a property downturn which is derailing the world's second biggest economy is starting to bottom out. Prices of new homes across China's 70 cities plunged 6.1% in April from the previous year, marking the same rate of drop as in the preceding month. The National Bureau of Statistics data showed new home prices in Beijing climbed 0.7% in April from March, improving from a 0.3% rise in March from February, while Shanghai prices increased 0.6% after being flat in the previous month. Market participants believe the flood of liquidity from China's aggressive monetary easing could boost housing sales.
With China's property sector estimated to make up around 20% of GDP, the property-market downturn is one of the major concerns of policy makers, who have been stepping up easing measures to support demand as the economy experiences the slowest growth rate in more than two decades. The People's Bank of China trimmed interest rates for the third time in six months May 10 and lowered the amount of money banks have to set aside as reserves, which should help to raise liquidity and boost economic activity.
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