China’s home prices rise for the first time in over a year

According to official data released earlier this month, home prices in China increased in January for the first time in a year. This rise in prices was attributed to the end of the zero-COVID policy, property policies that were favourable, and market expectations of additional stimulus measures, all of which increased demand. Based on data from the National Bureau of Statistics (NBS), new home prices rose by 0.1% on a month-on-month basis in January, compared to a 0.2% decline in December.

Although analysts view the rise in home prices as a positive indication, they believe that more policies to stimulate demand are necessary to improve the dismal state of the market and trigger a longer-term recovery. The market anticipates that Beijing will introduce additional easing measures, particularly during or after the annual parliamentary meeting in early March, to further revive the sector.

Zhou Hao, the chief economist at Guotai Junan International, stated that they believe that sales will begin to recover significantly from late Q2, supported by robust policy assistance from both the demand and financing side. An early recovery will be beneficial for the growth outlook. The property sector, which was once a driving force of the world’s second-largest economy, has been hampered by weak demand and increasing debt defaults among developers.

Since late last year, officials have implemented several forceful measures to support the property sector, such as promoting property financing and granting eligible cities the ability to eliminate the minimum mortgage rate for first-time homebuyers. The COVID-19 policy reversal by the Beijing government in December and supportive measures have led to a more positive outlook, but the recovery has been uneven.

Private surveys indicate that home sales, by floor area, have dropped approximately 20% from the previous year.

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China’s home prices rise for the first time in over a year

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