China new home prices grew at their slowest pace in 10 months in February, but property market expected to bottom out
- Prices edged up by 0.53 per cent last month, their slowest pace since April 2018, in 70 cities monitored by the government
Prices of new homes in mainland China grew at their slowest pace in 10 months in February, especially in smaller cities, according to the country’s National Bureau of Statistics.
Across 70 cities monitored by the government, prices edged up by 0.53 per cent last month, their slowest pace since April 2018 and down from 0.61 per cent in January, according to a Bloomberg calculation using National Bureau of Statistics data.
“Since property market sentiment cooled last August, it will take a while for buyers to return to the market,” said Yan Yuejin, research director at E-House China R&D Institute.
The prices of new homes rose in 57 out of the 70 cities covered, down from 58 in January and 59 in December. In particular, 35 smaller cities categorised by the bureau as tier 3 towns reported a 0.4 per cent increase, slower than a 0.6 per cent increase a month earlier and the 0.7 per cent gain registered in tier 2 cities.
Prices fell the most – by 0.4 per cent – in Quanzhou, a footwear and electronics manufacturing hub, according to the bureau. An earlier report by consultancy CRIC said Jinjiang, a district under Quanzhou, reported as much as a 73 per cent decline in home sales during Lunar New Year.
Other small cities, such as Yueyang, Bengbu and Huizhou, that reported large declines in sales during Lunar New Year, also recorded price declines.
“The Lunar New Year holiday is supposed to be a busy season for developers, as people returning from China’s big cities buy apartments in their hometowns. But this year, this did not materialise,” said Yang Kewei, an analyst with CRIC. “After a bull run, home prices in these cities are already expensive for returnees, and the outlook for further price rises is weak.”
Property sales by area declined by 3.6 per cent year on year across China, and by 2.8 per cent in value against a 12.2 per cent increase last year, according to the bureau.
This would also explain a less hawkish stance by Beijing towards the sector, China’s largest engine of economic growth.
Chinese President Xi Jinping’s “houses are for living in, not for speculation” mantra was notably missing from a closely watched economic report at this year’s legislative meetings in Beijing. Housing minister Wang Menghui vowed this week to avoid a “big rise and big fall” in property prices.
Ganxian, a small county in southern Jiangxi province, even barred developers from selling “big discounted” homes.
The gradual easing of property curbs by local governments and lowered mortgage rates have led analysts to suggest the slowdown in the property market will bottom out soon. Investment bank CICC recently raised its outlook for the market this year, and said it expected national sales volume to drop by 7 per cent, less than a previous forecast of 10 per cent. The fundamentals will bottom out no later than the end of the second quarter, it said.