Visitors check models of a housing project at an industry expo in Shanghai during the May Day holiday. Home prices in the city rose by 0.7 percent in April compared to March. [Photo/China Daily]
New home prices regain momentum in big cities as demand improves, says NBS
The decline in average prices for new homes in China slowed in April as sales improved on better market sentiment and prices in large cities regained momentum.
New-home prices declined from the earlier levels in 48 of the 70 cities tracked by the government, the National Bureau of Statistics said on Monday, compared with price drops in 50 cities in March. That translated into a 0.12 percent month-on-month fall in the national average, slowing from the 0.16 percent recorded in March, based on calculations by The Wall Street Journal.
On a year-on-year basis, prices continued to slump in April for the eighth straight month, falling 6.3 percent.
Property market downturn has been one of the major concerns for policymakers, who have been rolling out several easing measures to bolster demand. These included cuts in interest rates and reserve requirement ratios, and relaxations in requirements for second-home purchases.
Slower price contraction in April was accompanied with an increase in sales. China Daily's calculation based on NBS data showed sales of residential property rose 16 percent from a year ago in value terms and 7.7 percent in floor space terms. The NBS does not offer detailed monthly data.
The market recovery was mostly reflected in the first-tier cities. According to the NBS, new-home prices in Beijing rose by 0.8 percent in April, compared with just 0.3 percent in March. Prices in Shanghai rose by 0.7 percent, up from the almost flat levels in March.
Shenzhen's price gain led the nation, with a 1.8 percent jump in April. It is also the only city among the monitored 70 to post a price higher than a year ago. Its pre-owned home price even jumped by 2.4 percent, the largest gain among all cities.
"In first-tier cities, where demand from the first-time homebuyers and upgraders is robust, prices are much more sensitive to policy changes," said Xia Dan, an analyst with Bank of Communications Co Ltd.
Pre-owned home prices dropped last month in 34 cities from the previous month, compared with 48 in March, according to the NBS.
Adding to the upswing is the central bank's latest interest rate cut?the third in six months. As a result, the benchmark interest rates for five-year or longer term loans?an index for mortgage rate?has dropped to a 10-year low of 5.37 percent.
The effect was seen in sales in the largest cities. In the first half of May, pre-owned home sales in Beijing declined by 7.14 percent over the second half of April, according to brokerage 5i5j Group, but 187.4 percent higher than the same period in 2014. Pre-owned home sales accounted for 80 percent of the transactions in Beijing.
In Shenzhen, the sentiment is frenzied with buyers competing with one another to grab houses. Pre-owned home sales in the first half of May exceeded 6,000 units, compared with 10,450 units for the whole of April?a number already double from a year ago, and the highest monthly sale since March 2013. Average prices soared 28 percent through the year, according to Centaline Property Agency.
Analysts generally are optimistic about price rises in first-tier and some second-tier cities. Xia said she expected a "red hot" May, with sales and new home price increases. Pre-owned home prices should also post gains.
The central bank is expected to cut interest rates further in the second half of the year, which would further bring down borrowing costs. A bottoming out is also on the horizon, analysts said.
