China’s home prices rise for first time in 18 months in sign of rebound (2024)

China’s home prices rose for the first time in a year and a half, as favourable government policy restored some confidence to the beleaguered market.

The average price of a new home in 70 medium and large cities in mainland China edged up 0.3 per cent in February, after staying essentially flat in January, according to data released by the National Bureau of Statistics on Thursday.

Prices in 55 of the 70 cities tracked saw a monthly increase in February – 19 more than in the previous month – while lived-in home prices rose in 40 cities versus 13 in January, the latest data showed.

“[Fifty-five] is the largest number since July 2021, which suggests a good home sales performance in February and the start of the recovery in the sector,” said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institute.

On a year-on-year basis, 14 cities recorded an increase in new home prices while seven cities saw houses in the secondary market become more expensive in February.

“We can see the property market is definitely picking up since the start of the new year, with first-tier cities rebounding faster than lower-tier cities and the lived-in home market showing more robust recovery than the new-home market,” said Xu Xiaole, chief analyst with the Beike Research Institute.

“The recovery was supported by multiple factors. For example, the favourable policies from the government, from financing the developers to lowering the cost for homebuyers, has shored up sentiment.”

The average price of a new house in China increased 4.1 per cent on an annual basis to 10,588 yuan (US$1533) per square metre in the first two months of 2023, the first rise in 11 months, according to data released by the National Bureau of Statistics of China on Wednesday.

The volume of home sales in January and February dropped 3.6 per cent from a year ago to 151.3 million square metres while their sales value fell 0.6 per cent to 1,544 billion yuan.

“The price data indicates that the overall market is starting to rebound, and we expect home transactions data in the first quarter to turn positive from negative,” said Yan.

China’s authorities and local government have been stepping up their efforts to support the country’s property market since November, after a year-long crisis in the sector. They have been offering financial help to developers on an unprecedented scale in an effort to ensure home supply and restore stability in the sector.

Since then, home sales have become a key factor in gauging the pace of recovery of the Chinese property sector and signalling a possible “turning point” in the crisis.

Though the February sales data was a positive sign for the market, it will take time for a solid rebound to emerge, Xu warned.

“We need also to mention that the recovery in January and February is partly due to pent-up demand,” he said.

“Large transaction volumes in the short term do not mean that the market will heat up at high speed.”