Real estate gloomy in April as COVID weighs more on industry
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E-mail China Daily, May 19, 2022
Home prices in 70 designated cities in China reported slower or negative growth in April from a year ago, but industrial experts believe market stability remains achievable in the coming months as the current COVID-19 resurgence is being effectively contained and policies aimed at supporting rational demand will gradually take effect.
Out of the 70 major Chinese cities tracked by the National Bureau of Statistics, 47 cities saw new home prices decline month-on-month in April, nine more than that in March, and the number of cities reporting year-on-year price declines increased from 10 to 39, said Sheng Guoqing, chief statistician with the National Bureau of Statistics' urban division.
The four top-tier cities have shown more resilience in the housing market with average new home prices rising 0.2 percent from the previous month, though 0.1 percentage point less than that of March, according to data from the NBS published on Wednesday.
Compared to a year ago, the four benchmark cities' new home prices grew 3.9 percent, 0.4 percentage point lower than that of March.
The 31 second-tier cities tracked by the NBS reported a dip of 0.1 percent on average in new home prices in April, but up 1.0 percent from a year ago.
For 35 third-tier cities, new home prices slipped 0.6 percent month-on-month and 1.5 percent year-on-year.
"Based on NBS data, new home prices in the 70 major Chinese cities retreated 0.3 percent month-on-month and fell 0.1 percent year-on-year. And this was the first time since December 2015 for the year-on-year figure to fall," Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.
This turning point suggested that the housing market is under considerable downward pressure, and various efforts in stabilizing housing prices and market expectations should be pushed forward at an accelerated pace, Yan added.
Chen Xiao, senior analyst with Zhuge Real Estate Data Research Center, attributed the disrupted market recovery to the strict contagion prevention and control measures applied in many Chinese cities.
"The positive property policies announced recently by central and local governments still need time to take effect, and the road to a comprehensive recovery in the property market will be bumpy," Chen said.
The pre-owned home market performed a similar curve as the new home sector. There were 50 cities in which existing home prices declined month-on-month in April, five more than in March. And 56 cities recorded a decrease in prices year-on-year, nine more than that of a month earlier.
The four first-tier cities reported their home price in the secondary market rose by 0.4 percent from the previous month. Compared to a year ago, these benchmark cities' new home prices grew at 2.4 percent.
In the 31 second-tier cities, existing home prices declined 0.3 percent from a month ago, and down 1 percent year-on-year. The 35 third-tier cities saw existing home prices dip by 0.3 percent from the previous month, whilst the year-on-year figure dropped 2.5 percent.
The existing home market is usually a more direct reflection of the market outlook. "The fact that more than half of the cities' home prices are on a drop showed that the spread of COVID-19 has imposed challenges on home transactions, and at the same time has weakened market confidence and market expectations," said Li Yujia, chief researcher at the provincial residential policy research center of Guangdong.
The recent real estate policies including cutting home loan interest rates and lowering down payment proportions will boost market confidence as the current COVID-19 resurgences get fully contained. By then, all the existing measures and policies can be seen as effective in the second half of the year, added Li.
