Chinas Once-Sizzling Property Market Has Started to Cool

New home prices in China have fallen, and would-be buyers are thinking twice. Thats bad news for the overall economy.

A year ago, business was humming for Liang Jiawei, a property salesman in Zhanjiang, a coastal city in southern China.

He could sell three apartments in a day without much arm-twisting. The apartments were fairly generic, Mr. Liang admitted, but the new building complex in an up-and-coming neighborhood not far from a high-speed rail station was enough to entice buyers.

Then came a sudden reversal of fortune. Chinas property sector started to crumble under the weight of its huge debts. What was already shaping up to be the countrys worst housing market in years suffered another blow when a new variant of the coronavirus triggered widespread lockdowns and brought the economy to a standstill.

The turmoil has touched off a plunge in new home sales and depressed real estate prices for the first time in years, jeopardizing the prospects of an already fragile economy that had come to depend on housing for job growth and business spending, and putting at risk an important investment for millions of Chinese families.

So far, Chinas efforts to revive the housing market with lower mortgage rates, easier credit, subsidies and relaxed regulations have not worked. In April and May, new home prices fell in more than half of Chinas 70 biggest cities for the first time since 2016, and sales of such properties tumbled nearly 60 percent.

Zhanjiang, a port city of seven million people, had some of the steepest price declines among major cities. Mr. Liang said that he sold only five apartments in April. May was even worse.