An official data released on Saturday showed that new home prices in China rose at the fastest pace in 21 months in March, indicating that the housing market is picking up due to a series of supportive policies.
However, there is some uncertainty about the sustainability of this growth momentum.
According to Reuters’ calculations based on data from the National Bureau of Statistics, new home prices increased by 0.5% month-on-month in March, following a 0.3% rise in February.
This marks the third consecutive monthly increase and the most rapid rate of growth since June 2021.
On an annual basis, home prices fell by 0.8% in March, the smallest decrease since June 2022, following a 1.2% decline in February.
This represents the eleventh consecutive month of year-on-year declines in home prices.
An analyst at the Shanghai-based E-house China Research and Development Institution, Yan Yuejin said, “The housing price index shows a trend of stabilization and recovery, fully indicating the overall real estate is out of last year’s trough.”
According to Yan, strong home sales in March resulted in a boost to house prices in China. The property sector, which makes up around 25% of the country’s economy, faced difficulties in 2021 due to a regulatory crackdown and financing constraints, leading to a slowdown in construction and weakened consumer sentiment.
However, the easing of COVID restrictions in December triggered a rebound in home sales, and 64 out of 70 cities surveyed by the National Bureau of Statistics experienced an increase in new home prices in March.
An analyst at Goldman Sachs who made comment on the data, said, “The property sector recovery should be gradual and bumpy, due to the challenging demographic trend, still-tight financing conditions for troubled developers and policymakers’ long-held stance that ‘housing is for living in, not for speculation.
The growth of household medium-to-long term loans, mostly mortgages, accelerated in March, in line with the improved property transactions.
The central bank also reported an increase in the percentage of urban depositors planning to buy a home in the next three months, indicating a potential increase in demand.
China will release property sales and investment data for March on Tuesday, along with economic activity data and first-quarter GDP.