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China home prices seen rising 2 per cent in 2016 on extra policy support
[BEIJING] China's home prices are expected to rise slightly in the coming year, with the government expected to unveil more measures to support the struggling sector, a Reuters poll found on Tuesday.
Signs of stability in the property market would ease fears of a sharper slowdown in the broad economy, which is heading for its weakest growth in 25 years this year.
The median forecast of 13 analysts showed home prices are expected to rise 2.0 per cent in 2016 from a year before, cooling slightly from the 3.0 per cent seen in the last poll in August. "President Xi's elevation of the oversupply issue leads me to expect imminent policy measures to stimulate housing spending," said Tim Condon, an economist at ING in Singapore, referring to China's President Xi Jinping's remarks early last month on the risks posed by large inventories of unsold housing.
Xi told a meeting of financial leaders that China needed to reduce housing overhang to ensure sustainable development of its property market.
Housing inventories reached 436.5 million square meters in the first 10 months of this year, up 14 per cent from a year ago, official data showed.
Most respondents believed it would take at least two years to clear the overhang of unsold homes.
All respondents expected the central government would take more steps to lift the market next year, including tax breaks and downpayments cuts.
Following a year-long slump, China's home sales and prices have increased in bigger cities over recent months, helped by a barrage of government measures, including reduced downpayments for home buyers and scrapping home purchase restrictions except in the biggest cities.
But there are signs of policy effects fading away, as declining number of cities registered price rises last month.
Official data showed month-on-month price gains were recorded in only 27 of the 70 cities tracked by the NBS in October, down from 39 in September.
Eight of 13 respondents thought growth in China property investment would continue to slow in 2016 as high inventories discouraged new construction and investment.
Growth in China's property investment slipped to just 2.0 per cent in the first 10 months of 2015 from a year earlier, the slowest rate since early 2009, official data showed.
Poll respondents still see Chinese home prices as expensive. On a scale of 1 to 10, where 1 is extremely cheap and 10 is extremely overvalued, the median reply was 6.5, lower than 7 in the last poll.
Home prices in China rose 0.1 per cent in October from a year earlier, official data showed, marking the first annual rise in over a year.