China’s New Home Prices Show Significant Growth in March
According to official data released on Saturday, new home prices in China rose in March at the fastest rate in 21 months. This suggests that the market is improving due to supportive policies, but there is uncertainty about the sustainability of this growth.
In March, new home prices rose by 0.5% month-on-month, marking the third consecutive monthly increase, while annual prices fell by 0.8%, the smallest decline since June 2022. The property sector, which accounts for about 25% of China’s economy, was severely affected last year due to a regulatory crackdown on high debt levels of developers, resulting in financing difficulties and stalled housing projects.
However, strong home sales in March have contributed to the recovery of the sector. Yan Yuejin, an analyst at the E-house China Research and Development Institution, believes that the stabilization and recovery of the real estate market indicates that it has emerged from the trough of the previous year.
New home sales in China’s major cities have increased significantly in March, with pent-up demand being released following the relaxation of COVID restrictions in December. Among the 70 cities surveyed by the National Bureau of Statistics (NBS), 64 cities saw an increase in new home prices in monthly terms. This is the most cities since May 2019, up from 55 in February, indicating a broad-based increase in house prices among all city tiers.
However, analysts suggest that it is too early to determine whether this recovery in the property market will be sustained due to uncertainty over consumer confidence.
The analysts at Goldman Sachs believe that the property sector’s recovery will be gradual and bumpy, given the challenging demographic trend, financing conditions, and policymakers’ stance on property speculation.
Last month, over 50 cities introduced stimulus policies or relaxed some property rules, including subsidies, more housing provident funds, and easing home purchase curbs.
The central bank’s quarterly survey of urban depositors showed an increase in respondents’ plans to buy a home in the next three months, indicating improved consumer sentiment.