Both Weibo and X are buzzing: The -0.3% new home price reflects the reality of China's economy

Chapter 1: Warning of a Sharp Decline After 8 Months
In the early morning of July 15, Beijing time, the National Bureau of Statistics (NBS) announced that the prices of newly built homes in 70 major and medium-sized cities fell by 0.3% month-on-month in June. The rate of decline expanded from May (-0.2%), marking the largest drop in eight months since October 2024. Year-on-year, it was down by 3.2%, continuing a trend of over 3% declines for three consecutive months.Investing.com

Domestic media quickly reported, "The slowdown after the traditional demand period (March-April) is noticeable," and "price reduction campaigns" advertisements immediately appeared on street screens in Shanghai and Shenzhen. The evaporation of demand after the peak is once again tightening the cash flow of developers holding inventory.

Chapter 2: Statistics Speak of a Negative Spiral

• Real Estate Development Investment: Cumulative from January to June -11.2%

• Sales (Floor Area): Same -3.5%

• New Construction Starts (Floor Area): Same -20.0%
  Reuters

The decline in numbers was led by third- and fourth-tier cities. With population outflow and wage stagnation coinciding, the myth built over 30 years that "housing is the royal road to asset formation" is beginning to unravel.

Chapter 3: The "Ineffective Medicine" of Policy Packages
Since 2024, central and local governments have rapidly introduced multifaceted measures such as (1) lowering the down payment ratio, (2) reducing transaction taxes and fees, (3) local governments buying up inventory, and (4) promoting urban village redevelopment. However, the benefits of lowering mortgage interest rates have not sufficiently reached the young generation with stagnant income growth, and the purchasing mindset remains cold. EIU Senior Economist Xu Tianchen points out that "additional measures focused on the demand side are necessary."Investing.com

Chapter 4: A Polarizing Market—First-Tier vs. Lower-Tier Cities
J.P. Morgan analyzes that "the division by city tier and property grade will continue."Reuters Japan

• First-Tier Cities: Population and employment remain stable, and price adjustments are limited

• Second- to Fourth-Tier Cities: The supply-demand gap is widening, with some areas requiring over five years to digest inventory

Chapter 5: Scars Reflected in Corporate Earnings
Among major developers, Vanke, known as one of the "Big Three of China," shocked the market by forecasting a maximum net loss of 12 billion yuan for the first half. If a liquidity crisis surfaces, it could rekindle the risk of a chain collapse reminiscent of the 2021 Evergrande shock. Investors are closely watching "where the rescue line for state-owned enterprises will be drawn."Investing.com

Chapter 6: Ripples in the Financial Market
On the day of the announcement, both the Hong Kong Hang Seng Mainland Properties Index and the CSI300 Real Estate Index fell by 1.8% to 2.0%.Investing.com
While government bond futures rose due to safe-haven buying, commodities related to construction materials like copper and iron ore turned weak, disliking the "downward revision of demand expectations."

Chapter 7: "Countdown to Bankruptcy" Sweeps Through SNS

① Real Voices on Weibo

• 〈#How much have the houses everyone bought fallen?#〉—A poster in their late 20s laments, "The new home I bought two years ago has dropped by 300,000 yuan. My wedding funds have disappeared."weibo.com

• 〈#Even Tang Seng is selling his house#〉—A famous actor's "selling story" goes viral, expanding pessimism with comments like "If even celebrities are fleeing, what should ordinary people do?"weibo.com

② International Perspectives on X (formerly Twitter)

• Overseas real estate media @RealtyNXT quickly reported "the largest price drop in 8 months."X (formerly Twitter)

• Market updates @Sino_Market conveyed "all 70 cities declined," with replies mentioning "double mortgage hell for those born in the '90s" and "political risks being factored in."X (formerly Twitter)

• Economists' comments highlight that "deflationary pressure strengthens the negative cycle of wages → households → demand reduction."X (formerly Twitter)

The common theme in these posts is that the narrative of "price drop = opportunity" is overwhelmingly overshadowed by "debt risk."

Chapter 8: Expert Opinions
| Name | Affiliation | Comment Excerpt |
|---|---|---|
| Zhang Dawei | Chief Analyst at Centaline Property | "The effect of policies becomes obsolete quickly. It takes time for psychological stabilization."Investing.com |
| Xu Tianchen | EIU Senior Economist | "Further reduction of transaction taxes and fees should support first-time purchases."Investing.com |
| Chetan Ahya | Former Chief Asia Economist at Morgan Stanley | "The housing decline is a persistent deflationary factor."X (formerly Twitter) |

Chapter 9: Historical Comparison: Differences from the 2014-15 Adjustment
During the adjustment phase 10 years ago, (1) there was significant room for domestic interest rate cuts, and (2) the international environment was accommodative. However, now the "depletion of fiscal resources post-zero-COVID" and the "perpetuation of US-China friction" raise hurdles. As a result, the "sustainability of policies" has become the main point of contention.

Chapter 10: Global Ripple Effects—Impact on Raw Materials and the Australian Economy
The slowdown in China's construction industry, which accounts for about half of steel demand, has a chain effect on Australian iron ore prices and Southeast Asian cement demand. The Reserve Bank of Australia estimates in its semi-annual report that "China's real estate could affect the growth outlook by ±0.4%."

Chapter 11: Implications for Investors

• Stocks: Select developers. Shift funds to large state-owned and rental-focused REITs

• Bonds: High-yield Chinese real estate bonds see spread widening again

• Commodities: Short-term downside risk for copper and iron ore

Final Chapter: Reconsidering "Is a House an Investment or Consumption?"
The narrative of "housing as an absolutely safe asset" is coming to an end. The future focus is on returning to "real demand + low leverage." Facing deflationary pressure and demographic barriers, China is entering a phase of abandoning the idea of "housing as a panacea for economic stimulus" and seeking new growth engines.