China home prices drop at slower pace as property slump abates

[BEIJING] China’s home price declines moderated in February, a sign that the property downturn may finally be reaching a bottom.

New-home prices in 70 cities, excluding state-subsidised housing, dropped 0.28 per cent from January, when they slid 0.37 per cent, figures from the National Bureau of Statistics showed on Monday (Mar 16). Resale home values, which are subject to less government intervention, decreased 0.43 per cent, the smallest decline in 10 months.

Chinese officials emphasised the need to stabilise the real estate sector at a key political meeting earlier this month, pledging to use city-specific policies to “control new supply and reduce inventory”. That followed a steady stream of supportive measures by local governments in recent months.

Citigroup expects policy tailwinds to fuel a broad-based rebound in home sales in March, analysts led by Griffin Chan said in a recent note. New home sales could improve in the upcoming busy season after the recent local easing measures, they said.

Among 70 major cities tracked by the government, 10 saw new-home values climb from a month earlier, the most since last June. Most of them are top-tier cities and provincial hubs.

Supportive measures for the property market have trickled out across cities in recent months. Shanghai eased homebuying rules last month, allowing more non-residents to purchase homes in urban zones. Beijing’s local government further relaxed rules for non-resident homebuyers in December.

The central government has also lowered the value-added tax for selling residential properties owned for less than two years.

Green shoots have emerged in the used-home market, where sales picked up modestly after a drop in values made residences more affordable. In 18 major cities, existing-home sales rose 16 per cent in January from a year earlier and 38 per cent in early February, according to Citigroup.

Real estate investment fell 11.1 per cent in the first two months of the year, narrowing from a 17.2 per cent decline last year, separate government data showed.

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Investors are watching whether the momentum extends into March and April, traditionally a high season for sales.

Many remain sceptical. Home prices will keep falling for at least two more years, John Lam, UBS Group’s head of China property research, said in November. Lam, who was previously optimistic in an industry recovery, blamed the persistent decline in values of used homes. BLOOMBERG