China resale home prices fall at slower pace in positive sign

CHINA’S second-hand home prices fell at a slower pace in January, providing a glimmer of hope that the prolonged property crisis is easing.

Resale home prices in 70 cities dropped 0.5 per cent from December, the smallest decline in eight months, figures from the National Bureau of Statistics showed on Friday (Feb 13). Values of new homes, excluding state-subsidised housing, slid 0.4 per cent, the same pace as a month earlier.

Supportive measures for the property market have trickled out in recent months. Beijing city further relaxed rules for non-resident homebuyers in December. The central government lowered the value-added tax for selling residential properties owned for less than two years.

Secondary home prices have been stabilising in recent weeks as homeowners become less urgent about selling their properties, Michelle Kwok, head of Asia real estate research at HSBC Holdings, said on Bloomberg Television.

If supportive policies continue to come through, 2026 is likely to see a “stabilisation or even a progressive recovery that would play out very nicely”, she said.

All four Tier-1 cities saw a narrower decline in existing-home prices last month, the figures showed. In Beijing, resale home values dipped just 0.2 per cent, compared with a 1.3 per cent drop seen in December.

Investors are now awaiting next month’s National People’s Congress, an annual legislative meeting where policymakers typically set key economic goals, including growth and Budget targets. A work report due on the first day will signal the government’s guidelines for the real estate sector.

Chinese leaders already vowed to increase policy support for the residential market last month, including by encouraging the acquisition of existing housing stock to reduce inventories. Policymakers are also considering measures including providing new homebuyers with mortgage subsidies, sources familiar with the matter said in November.

Vanke risk

The property downturn has weighed on China’s economy for more than four years, deepening the distress for cash-strapped builders. China Vanke, once the country’s biggest builder, last month warned it lost about 82 billion yuan (S$15 billion) last year, even though it narrowly staved off an imminent default.

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While Kwok called Vanke’s case an “idiosyncratic risk”, not all analysts are optimistic about a housing recovery.

“China’s property market is still searching for a floor, and 2026 is shaping up to be another year of adjustment rather than revival,” Michelle Lam, Greater China economist at Societe Generale, wrote in a note last week. “Inventories remain stubbornly high outside the biggest cities, and neither income growth nor buyer confidence is strong enough to spark a meaningful turn.”

A Bloomberg Intelligence gauge of Chinese property developer shares fell 1.1 per cent on Friday, paring this year’s advance to 6.4 per cent.

Home prices will keep falling for at least two more years, John Lam, UBS Group’s head of China property research, said in an interview in November. Lam said the values of used homes in major cities have dropped more than a third from their peak levels. BLOOMBERG