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China's new home prices in 100 cities saw a slight month-on-month increase in March, reversing the small decline in February, driven by seasonal demand in major cities. Higher-quality projects in core cities supported a modest recovery in sales, though analysts warn that weak employment and elevated inventory continue to weigh on market sentiment. The prolonged property downturn, triggered by government borrowing curbs since 2020, has strained developer liquidity. Ongoing geopolitical tensions and a potential shift toward second-hand homes add uncertainty to the sustainability of this recovery.
China's new home prices recorded a marginal increase in March, reversing the slight decline observed in the previous month, according to a private property survey. The rise was supported by a seasonal pickup in demand in major cities, the survey indicated. Advertisement
The China Index Academy, one of the country's leading property research firms, reported that new home prices across 100 cities grew by 0.05% month-on-month, following a 0.04% decline in February. The firm noted that an increase in higher-quality project supplies in core cities contributed to a modest recovery in new home sales during March.
The research organization highlighted that sustaining this recovery in April would be crucial. If momentum continues in major cities, it could improve market expectations and strengthen the foundation for stable property market performance throughout the year.
China's property sector has faced a prolonged downturn since government measures in 2020 limited excessive borrowing by developers. This restriction has strained developer liquidity, leaving many companies unable to repay debt or complete pre-sold housing projects. The ongoing slump has also complicated government efforts to rebalance the economy while managing external pressures, including rising trade protectionism from major partners and the economic impact of the war in the Middle East.
Month-on-month declines in second-hand home prices have narrowed, but analysts caution that a quicker shift of buyers toward the secondary market could suppress new home sales. Fitch Ratings Asia-Pacific corporate ratings director, Shi Lulu, observed that weak employment, high housing inventory, and other structural challenges continue to keep overall market sentiment fragile. She added that escalating geopolitical tensions have further increased uncertainty regarding whether the current recovery can be maintained.
Source Reuters
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