According to data from the National Bureau of Statistics (NBS), new home prices in China’s first-tier cities experienced a 0.3 percent decline in January compared to December, narrowing 0.1 percentage point from the previous month. Similarly, secondary market prices edged down by 1 percent in January compared to December, also narrowing by 0.1 percentage point.
Observers interpret this moderate decline as a signal that the real estate market in China is gradually “stabilizing” in January, indicating a shift from its lukewarm status in the previous year. Confidence is voiced that the market will embark on a firm recovery trajectory in 2024, supported by various policies such as easing purchasing curbs, interest rate cuts, and efforts to restore market confidence.
In alignment with trends in first-tier cities, new and secondary home prices in second- and third-tier cities reported a decline in January, but the drops have mostly tapered off from previous months.
Out of the 60 major cities analyzed, a total of 11 cities recorded gains in new home sales prices in January, compared to seven in December. This marks the first time in nearly a year that the number of cities witnessing soaring new property prices has increased.
Yan Yuejin, the research director at Shanghai-based E-house China R&D Institute, highlighted the significance of the index, indicating that housing demand is gradually being released, and adjustments on home prices could be nearing an end. Yan noted that the housing data released in January provide positive signals, suggesting that pressures on the real estate market have eased to a certain extent and are developing in a more stabilized manner, contributing to bolstering homebuyers’ confidence.
The recent 25 basis points reduction in China’s central bank benchmark mortgage reference rate, the largest one-time rate reduction in years, aims to stimulate credit demand and revive the property market. Several major Chinese cities have relaxed curbs on property buying, and there are reports that the government is compiling a “white list” of real estate companies eligible for concessional loans and financial support from commercial banks.
Industry observers express optimism regarding the long-term outlook as the market continues to improve. They expect additional policies to be introduced to guide market expectations and inject new dynamics into both the demand and supply sides of the real estate market. In 2023, China’s property investment experienced a 9.6 percent year-on-year plunge to 11.1 trillion yuan ($1.64 trillion), with commercial apartment sales also declining by 6.5 percent year-on-year to 11.7 trillion yuan, according to NBS data.