China’s home prices rose for a second consecutive month in March, adding to signs that the country’s real estate sector is stabilizing.
(Bloomberg) — China’s home prices rose for a second consecutive month in March, adding to signs that the country’s real estate sector is stabilizing.
New home prices in 70 cities, excluding state-subsidized housing, increased 0.44% from a month earlier, after rising 0.3% in February, the National Bureau of Statistics reported Saturday. Price gains expanded to 0.26% in the secondary market, after climbing 0.12% a month earlier.
China’s economic recovery depends on a lasting rebound in the real estate sector, which remains fragile as cautious households and a shrinking population curtail demand. Development-related investments kept shrinking as of February despite a warm-up in residential sales.
“The March data pointed to an evident stabilization of the home market,” Yan Yuejin, research director at E-house China Research and Development Institute, said.
Some market watchers believe a housing recovery may struggle to keep momentum, though. Demand persisted in March thanks to stimulus policies and the end of Covid curbs, but we have started to see sales momentum weaken in some smaller cities, China Real Estate Information Corp. analysts led by Yang Kewei wrote in a report before the data release.
Buyer interest could wane if developers decide to increase prices later in the year, they said.
Chinese residents remain cautious about property investments, especially in smaller cities, Nomura Holdings Inc.’s chief China economist Lu Ting said, adding that the households increased bank deposits in March.
Still, shrinking sales in some cities since April are unlikely to tank home prices again, E-house’s Yan said, as towns and districts offer incentives to prospective buyers.
Some smaller cities are relaxing purchasing restrictions to generate sales. In one district on the outskirts of Beijing, authorities are planning to allow families with more than one child to buy more than one home.
(Updates with analysts’ comments from the fourth paragraph.)
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