Government Support and Policy Adjustments Contribute to Accelerated Growth
China’s real estate market has witnessed a notable surge in new home prices, reaching the fastest monthly pace in almost 2.5 years, according to a recent survey released on Thursday. This uptick follows a series of government support measures and expectations of further policy adjustments in the homebuying sector.
Key Findings:
1. Rapid Monthly Growth:
Average home prices across 100 cities in China recorded a fifth consecutive monthly increase.
In January, the month-on-month gain of 0.15% surpassed the 0.1% rise observed in December, marking the swiftest rise since August 2021.
2. Expanding Price Growth Across Citie
The survey by China Index Academy revealed that 49 cities experienced month-on-month price growth in January, up from 47 in December.
3. Recovery Measures and Policy Changes:
China’s property market faced challenges in the previous year, witnessing a significant decline in new home prices in December, influenced by a developer debt crisis and regulatory interventions.
Over the past year, the Chinese government has implemented policies to rejuvenate the real estate industry and bolster buyer sentiment. Recent easing of home-buying curbs in major cities like Shanghai, Suzhou, and Guangzhou reflects a concerted effort to revive the market.
4. Anticipation for Post-Holiday Activity:
Analysts predict an increase in market activity after the Lunar New Year holidays (Feb. 10 to 17), expecting a positive impact from the recent policy adjustments in Guangzhou and Shanghai.
Forecasts suggest that Beijing and Shenzhen may further optimize property market policies, while second-tier cities may consider lifting housing purchase restrictions.
5. Sales Performance and Home-Buying Sentiment:
Despite the rise in home prices, a separate survey by the China Index Academy reported a 33.3% year-on-year decline in total sales of 100 surveyed real estate enterprises in January.
Analysts attribute the sales decline to the traditional low season in January but note a persistent weakness in home-buying sentiment.
6. Concerns Over Evergrande’s Liquidation:
Fitch Ratings expressed concerns about the potential impact of the liquidation process for China Evergrande Group, emphasizing prolonged uncertainty and broader implications for creditors.
Confidence in private developers may take a considerable amount of time to recover, potentially shifting market share toward state-owned companies.
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Credit: Liangping Gao and Ryan Woo