Housing sector is nearing stability

With demand rising gradually, home prices may improve in early spring

By Wang Ying in Shanghai | China Daily | Updated: 2024-02-24 08:04
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Potential homebuyers size up a residential property model in Beijing. JIANG QIMING/CHINA NEWS SERVICE

More Chinese cities reported home price rises in January compared to December, suggesting the ongoing market correction may end soon and stoke expectations of a mild sales pickup in benchmark Chinese cities around early spring, industry experts said on Friday after digesting the latest data from the National Bureau of Statistics.

Fewer cities reported home price drops in January. Price declines narrowed as well in most cities, said Wang Zhonghua, an NBS statistician.

In month-on-month terms, 56 out of the 70 Chinese cities tracked by the NBS reported drops in new-home prices in January, compared to 62 in December. In year-on-year terms, 53 cities reported drops in new-home prices in January, compared to 48 in December.

"More cities saw their new-home prices rise for the first time in the past 11 months, indicating demand is rising gradually, causing positive correction in home prices," said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.

Eleven cities' new-home prices rose last month, against seven in December, Yan said.

New-home prices in the four top-tier cities — Beijing, Shanghai, and Guangzhou and Shenzhen in Guangdong province — fell 0.3 percent from December, and declined 0.5 percent year-on-year, NBS data showed.

The 31 second-tier cities tracked by the NBS reported that new-home prices dropped 0.4 percent both month-on-month and year-on-year on average in January.

In 35 third-tier cities, new-home prices declined 0.4 percent month-on-month and dropped 2.1 percent year-on-year.

"All the three tiers of cities reported a slower month-on-month home price declines in January, and this trend is particularly evident among the first-tier cities," said Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center.

Since December, the four largest Chinese cities have lifted some of their home purchase restrictions, and also lowered down payment ratio for first-home and second-home purchases, Li said.

Thanks to its solid fundamentals, Shanghai remained the most resilient city in terms of home prices, with new-home prices up 0.4 percent month-on-month and up 4.2 percent year-on-year in January, Yan said.

"The home price index suggested that after three months of large-scale corrections, the home market is showing signs of stabilization, especially considering the supportive measures for shoring up demand and extending financing to property development," said Zhang Dawei, chief analyst at Centaline Property Agency.

Property regulations were tweaked, revised or amended 1,008 times across the nation last year. This has not only lowered requirements for homebuying but greatly lowered the cost of buying residential properties in various Chinese cities.

"Given the biggest-ever (25-basis-point) cut to over-five-year loan prime rate on Tuesday, many lenders will likely lower their mortgage rates. So, a mild pickup is highly likely in top-tier cities in the first quarter. The housing markets in other Chinese cities will probably continue the adjustment and prices there may bottom out in the coming months," said Zhang.

Meanwhile, prices of existing homes also appeared to be stabilizing, NBS data showed. Some 68 cities saw their existing home prices drop month-on-month in January, compared to 70 in December.

The four first-tier cities reported that home prices in the secondary market slid 1 percent month-on-month and dropped almost 5 percent year-on-year.

In 31 second-tier cities, existing home prices edged down 0.6 percent month-on-month and fell 4.4 percent year-on-year. In 35 third-tier cities, existing home prices dropped by 0.7 percent month-on-month and fell 4.5 percent year-on-year.

"Local-level supportive measures will likely increase, which will stimulate demand," said Guan Rongxue, a senior analyst with the Zhuge Real Estate Data Research Center.

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