Two global credit ratings firms lowered their forecasts for China’s property market, as an accelerating slump in home prices hampers the country’s efforts to rescue the sector. 

S&P Global Ratings now expects residential sales to drop 15% this year, more than the 5% decline it projected earlier. That will put sales below 10 trillion yuan (US$1.4 trillion or RM6.49 trillion), around half the peak in 2021, the ratings company said on Thursday. 

Fitch Ratings on Wednesday cut its annual sales estimate to a decrease of 15% to 20%, worse than an earlier estimate of a 5% to 10% drop. 

The ratings firms’ bleaker outlook suggests they have little confidence that recent stimulus measures will end the property slump that’s dragging on the world’s second-largest economy. 

The institutions blame a bigger-than-expected drop in home prices, which deters buyers. Values of new homes fell the most in almost a decade in May, official figures showed this week, while used-home prices had the sharpest decline in at least 13 years. 

Real estate accounts for about 78% of household wealth in China - double the US rate - and families typically save for years and borrow from friends and relatives to purchase a home. 

Policymakers unveiled a broad real estate rescue package last month, involving relaxing mortgage rules and encouraging local governments to buy unsold homes. Three of the nation’s biggest cities - Shanghai, Shenzhen and Guangzhou - have since rolled out major easing for homebuyers, slashing down payment requirements and allowing room for cheaper mortgages. 

  - Bloomberg