By Liangping Gao, Yukun Zhang and Ryan Woo
BEIJING (Reuters) – China’s new home prices stopped falling in December for the first time in 18 months, official data showed on Friday, after the government launched multiple rounds of stimulus to lift the property sector from a prolonged slump.
That contrasted with a 0.1% month-on-month decline in November, as calculated by Reuters based on data from China’s National Bureau of Statistics (NBS). On the annual level, the prices of new apartments fell by 5.3% after a fall of 5.7% in the previous month.
Home sales in China have fallen since the housing market was hit by the crisis in 2021. Debt-laden property developers are struggling to repay their loans and deliver pre-sold homes, weakening confidence in the sector.
Beijing introduced a series of measures in the second half of last year to support the housing market, including cutting mortgage rates and allowing local governments to buy unsold housing units and unused land with special bond revenues.
These policies have helped stabilize real estate expectations, with some cities, especially tier-one cities, showing signs of recovery, said Zhang Dawei, an analyst at real estate agency Centaline. However, he warned that the overall real estate market has not yet bottomed out.
Zhang expected supportive measures to come in March, possibly including further cuts in mortgage rates, easing restrictions on home purchases and cutting taxes and transaction fees.
Risks in China’s real estate market have significantly eased, the governor of the country’s central bank said on Monday. This view is supported by stable month-on-month prices and an increase in prices in the first-tier cities in December.
Of the 70 cities that NBS investigated, 23 cities recorded an increase in apartment prices, six more than the previous month.
However, despite the government’s efforts to strengthen the sector in various ways, the underlying problems faced by most developers have hardly abated in the last three years.
“The real estate sector is still under pressure and the authorities do not want to see a return to the old days of debt and big price growth, so investors still need to be patient,” said Ben Bennett, Asia-Pacific investment strategist at Legal And General Investment Management.
Additional real estate data released on Friday points to a continued slowdown in supply in China’s real estate market. Investments in real estate fell 10.6% in 2024 compared to the previous year, the biggest annual decline in history, according to separate official data.
Moreover, real estate sales and new construction starts, measured by area, fell by 12.9% and 23.0% in 2024, respectively, signaling continued challenges for China’s real estate sector for the foreseeable future.
