China new home prices fall for first time since December

China new home

In April, 47 among 70 cities surveyed by the NBS reported new home prices falling from the previous month, compared with 38 cities recording a decline in March

China’s new home prices in April fell for the first time month-on-month since December, official data showed on May 18, depressed by fragile demand in small cities and strict, widespread Covid-19 lockdowns.

New home prices rose 0.7% from a year earlier, the slowest pace since October 2015 and easing from a 1.5% gain in March.

The outlook for China’s property market has been bleak in recent months. The market, a pillar of the world’s second-largest economy, has been weakened by a government clampdown on excessive borrowing from developers.

Last month, more than 40 cities had taken steps to stoke home buyers’ interest, including subsidies, cuts in mortgage rates and allowing larger loans from provident housing funds.

The northern city of Tianjin issued a consultation draft on April 24 that provided for increasing the maximum loan from such a fund to first home buyers to 800,000 yuan ($118,641) from 600,000 yuan ($88,981).

Chinese financial authorities on May 15 allowed a further cut in mortgage loan interest rates for some home buyers.

In April, 47 among 70 cities surveyed by the NBS reported new home prices falling from the previous month, compared with 38 cities recording a decline in March.

New home prices in tier-three and tier-four cities fell a monthly 0.6%, extending from a 0.2% drop in March.

Prices in tier-two cities, such as Chengdu and Nanjing, fell 0.1%, compared with zero growth in March. In tier-one cities, such as Shanghai and Beijing, prices rose 0.2% versus 0.4% growth in March.

Housing prices dropped in more cities in April. The housing sector is going through a crisis, said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

The government policy has turned more supportive but not overwhelmingly so. There are still quite many restrictions, Zhiwei said.

Covid-19 outbreaks and prolonged lockdowns in dozens of cities have further weighed on the already vulnerable property market.

Shanghai has endured lockdowns for about seven weeks. It plans to resume outdoor activities in stages and lift the lockdowns by June.

Household income likely got damaged by the Omicron outbreaks, and the lockdowns made housing transactions and investment difficult, Zhang said.

Zhang said: It is not clear when the housing sector will rebound.

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