China’s new home prices rise in March; big cities see seasonal pickup

[BEIJING] China’s new home prices edged up in March, reversing a decline in the previous month, supported by a seasonal pickup in demand in major cities, a private survey showed on Wednesday (Apr 1).

New home prices in 100 cities rose 0.05 per cent from a month earlier after falling 0.04 per cent in February, according to the China Index Academy, one of the country’s largest property research firms.

The firm said increased supplies of higher-quality projects in core cities helped drive a modest recovery in new home sales in March.

“The continuity of this recovery in April will be critical,” the firm said. “If momentum can be maintained in major cities, it will help improve market expectations and lay a stronger foundation for stable market performance throughout the year.”

China’s property downturn, triggered by government curbs since 2020 on excessive borrowing by developers, has strained their liquidity, leaving many unable to service debt or complete pre-sold housing projects.

The prolonged slump has complicated policymakers’ efforts to rebalance the economy and shield it from external pressures, including rising trade protectionism among major partners and the fallout from the war in the Middle East.

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Month-on-month declines in second-hand home prices narrowed. But a faster shift by homebuyers toward the secondary market could weigh on sales of new homes, analysts said.

“Given weak employment conditions, elevated housing inventory and other fundamental challenges, overall market sentiment remains fragile,” said Shi Lulu, director of Asia-Pacific corporate ratings at Fitch Ratings, in a research note this week.

She added that escalating geopolitical conflicts had increased uncertainty about whether the recovery could be sustained. REUTERS