Workers walk past a construction site near residential buildings in Beijing, China. Reuters
Beijing: House prices in China have increased at a rapid speed in 21 months, official data shows.
The rise in property prices indicates that the market is flourishing amid a flurry of support policies, but there is uncertainty about the strength of the momentum.
In March, new home prices reached up to 0.5 per cent month-on-month after a 0.3 per cent rise in February, making it the highest growth in over two years, according to Reuters calculations based on National Bureau of Statistics (NBS) data.
The property sector, accounting for roughly a quarter of China’s economy, was hit hard last year as a regulatory crackdown on developers’ high debt levels snowballed into a financing crunch, stalling construction on housing projects. Some buyers boycotted mortgage repayments, further weakening consumer sentiment amid tough COVID restrictions.
However, soon after China reversed its zero-COVID, major Chinese cities saw a rebound in property sales as pent-up demand was unleashed following the rollback in December 2022.
Among 70 cities surveyed by the NBS, 64 cities saw an uptick in new home prices in monthly terms, the most cities since May 2019 and up from 55 in February.
Experts have, however, said that it’s too early to comment if the recovery will sustain.
An analyst at Goldman Sachs said, “The property sector recovery should be gradual and bumpy, due to the challenging demographic trend, still-tight financing conditions for troubled developers and policymakers’ long-held stance that ‘housing is for living in, not for speculation’.”
Last month, more than 50 cities introduced stimulus policies or relaxed some property rules, including subsidies, more housing provident funds and easing home purchase curbs.
“The biggest problem in the economy is insufficient demand with increasing deflationary pressure, the continued stabilization of real estate is critical as recent data showing sales growth has slowed,” said Wu Jinhui, an analyst at CSCI Pengyuan Credit Rating Limited.
With inputs from agencies
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