More Chinese cities reported home price rises in January compared to December, suggesting the ongoing market correction may end soon and stoke expectations of a mild sales pickup in benchmark Chinese cities around early spring, industry experts said after digesting the latest data from the National Bureau of Statistics (NBS). Fewer cities reported home price drops in January. Price declines narrowed as well in most cities, said Wang Zhonghua, NBS Statistician. In month-on-month terms, 56 out of the 70 Chinese cities tracked by the NBS reported drops in new-home prices in January, compared to 62 in December. In year-on-year terms, 53 cities reported drops in new-home prices in January, compared to 48 in December. “More cities saw their new-home prices rise for the first time in the past 11 months, indicating demand is rising gradually, causing positive correction in home prices,” said Yan Yuejin, Director of the Shanghai-based E-house China Research and Development Institution. Eleven cities’ new-home prices rose last month, against seven in December, Yan said.
New-home prices in the four top-tier cities – Beijing, Shanghai, and Guangzhou and Shenzhen in Guangdong province – fell 0.3% from December, and declined 0.5% year-on-year, NBS data showed. The 31 second-tier cities tracked by the NBS reported that new home prices dropped 0.4% both month-on-month and year-on-year on average in January. In 35 third-tier cities, new-home prices declined 0.4% month-on-month and dropped 2.1% year-on-year. “All the three tiers of cities reported slower month-on-month home price declines in January, and this trend is particularly evident among the first-tier cities,” said Li Yujia, Chief Researcher at the Guangdong Planning Institute’s Residential Policy Research Center. Since December, the four largest Chinese cities have lifted some of their home purchase restrictions, and also lowered the down payment ratio for first-home and second-home purchases, Li said.
Thanks to its solid fundamentals, Shanghai remained the most resilient city in terms of home prices, with new-home prices up 0.4% month-on-month and up 4.2% year-on-year in January, Yan said. “The home price index suggested that after three months of large-scale corrections, the home market is showing signs of stabilization, especially considering the supportive measures for shoring up demand and extending financing to property development,” said Zhang Dawei, Chief Analyst at Centaline Property Agency.
Property regulations were tweaked, revised or amended 1,008 times across the nation last year. This has not only lowered requirements for home buying but greatly lowered the cost of buying residential properties in various Chinese cities. “Given the biggest-ever 25-basis-point cut to the over-five-year loan prime rate, many lenders will likely lower their mortgage rates. So, a mild pickup is highly likely in top-tier cities in the first quarter. The housing markets in other Chinese cities will probably continue the adjustment and prices there may bottom out in the coming months,” said Zhang.
Meanwhile, prices of second-hand homes also appeared to be stabilizing, NBS data showed. Some 68 cities saw prices drop month-on-month in January, compared to 70 in December. The four first-tier cities reported that home prices in the secondary market slid 1% month-on-month and dropped almost 5% year-on-year, the China Daily reports. The People’s Bank of China (PBOC) on February 20 lowered the five-year loan prime rate (LPR), which commercial banks use as a benchmark to adjust their mortgage rates, from 4.2% to 3.95%, marking the largest rollback since the system was introduced in 2019. Following the cut, housing loan rates for first-time homebuyers can fall to as low as 3.75%, and rates on second-home mortgages could decline to 4.15%, he said. The central bank last cut the rate by 10 basis points in June. Meanwhile, the one-year LPR – an indication of market lending rates – remained unchanged at 3.45%.
