With a stimulus push, China's new housing prices stabilise.



Reuters, BeijingAccording to official data released on Friday, China's new home prices stopped declining in December for the first time in 18 months. This came after the government implemented several rounds of stimulus to help the real estate market recover from a protracted downturn.

In contrast, Reuters' analysis of data from China's National Bureau of Statistics (NBS) showed a 0.1% month-over-month fall in November. After declining 5.7% in the previous month, new home prices declined 5.3% on an annual basis.


Since a crisis overtook the Chinese real estate industry in 2021, home sales have fallen. Confidence in the industry has been weakened by debt-ridden real estate developers' inability to pay back their loans and deliver pre-sold homes.

In the second half of last year, Beijing implemented a number of policies to boost the real estate market, such as lowering mortgage rates and enabling local governments to use the revenues from special bonds to purchase unsold housing units and vacant land.

According to Zhang Dawei, an analyst at real estate firm Centaline, these policies have helped to stabilise real estate expectations, with some cities—particularly first-tier ones—exhibiting indications of recovery. He did warn, though, that the real estate market as a whole had not yet reached its lowest point.

Zhang anticipated more benevolent measures in March, such as potential more mortgage rate reductions, relaxation of home-buying limitations, and reductions in transaction taxes and fees.

China's central bank governor stated on Monday that the country's real estate market risks have been greatly reduced. The consistent monthly prices and price hikes in first-tier cities in December bolstered that opinion.
Twenty-three of the 70 cities the NBS polled witnessed a rise in housing prices, six more than the month before.


The basic issues that most developers face, however, have scarcely improved over the last three years, despite the government's attempts to fortify the industry in a number of ways.

Per Ben Bennett, Asia-Pacific Investment Strategist at Legal And General Investment Management, "investors still need to be patient because the property sector is still under pressure and authorities don't want to see a return to the old days of leverage and big price rises."

More real estate-related data that was made public on Friday showed that the Chinese real estate market's supply side was still weak. Separate government data shows that property investment in 2024 experienced the biggest annual decline on record, falling 10.6% from the year before.

Furthermore, as measured by floor area, property sales and new building starts decreased 12.9% and 23.0%, respectively, in 2024, indicating ongoing difficulties for the Chinese real estate market going forward. 




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