China’s property slump showed no signs of improvement in the three months to June, with its output falling in a fourth straight quarter and clouding the outlook for growth for the rest of the year.
Output in the real estate industry, a key economic contributor, fell 7% in the second quarter from a year earlier, the Office for National Statistics said in a report on Saturday. It remained the biggest drag on the world’s second-largest economy of all sectors and performed worse than in the first quarter of 2022, when it contracted by 2%, the report showed.
The sector has recently come under new pressure, with households in dozens of cities defaulting on their mortgage payments because developers have not completed building their homes. State media quoted analysts as saying it could damage the stability of the financial system if multi-location home buyers follow suit.
Home sales fell 23.4% in June and property investment fell 9.4%, according to official data released Friday.
China’s economy grew 0.4% in the second quarter, data showed, missing economists’ estimates of a 1.2% expansion and at the slowest pace since the country was first hit by the coronavirus two years ago.
Hotels and restaurants, one of the hardest-hit sectors, saw output fall by 5.3% last quarter, making it the second-best performing sector. This compared with a 0.3% decline in the previous three-month period. Covid lockdowns and food service suspensions in several major cities have dealt a heavy blow, while fears of contagion have also deterred consumers.
The transport, storage and postal sector decreased by 3.5% compared to the same period in 2021, while production in industrial enterprises increased by 0.4%.