© Reuters. FILE PHOTO: A person works at a residential building construction site in Beijing, China September 6, 2023. REUTERS/Tingshu Wang/File Photo
BEIJING (Reuters) -China’s new home prices rose in January at the fastest monthly pace in nearly 2-1/2 years, according to a survey released on Thursday, following a slew of government support measures and expectations of further relaxation in homebuying policies.
Average prices across 100 cities grew for a fifth consecutive month, with the January month-on-month gain of 0.15% outpacing the 0.1% increase in December, according to Chinese real estate research firm China Index Academy. It was the fastest rise since a 0.2% gain in August 2021.
The number of cities with month-on-month price growth stood at 49 in January, up from 47 in December.
China’s property market ended last year with the equal worst monthly decline in new home prices in nearly nine years at 0.4% in December, according to Reuters calculations based on official data.
It was hit by an unprecedented developer debt crisis after a regulatory crackdown on the sector’s high leverage in 2020.
Over the past year, the world’s second-largest economy has been introducing policies to help revive the industry and restore buying sentiment. This week, two major cities, Shanghai and Suzhou, followed Guangzhou in easing home-buying curbs.
A state-backed property project also received the first development loan under a so-called whitelist mechanism, according to reports in state media.
“Currently, as the easing policies in Guangzhou and Shanghai have just been announced, the effects have not yet been reflected in the transaction data,” China Index Academy said.
Market activity may pick up after the Feb. 10 to 17 Lunar New Year holidays, according to the research firm.
“Beijing and Shenzhen are expected to further step up optimisation of property market policies, (while) second-tier cities likely completely abolish housing purchase restrictions across the board,” it said.
Still, total sales of 100 surveyed real estate enterprises dropped 33.3% year-on-year by value in January, outstripping the decline a year earlier by 1.6 percentage points, according to a separate survey by the China Index Academy.
The sales decline was partly due to the traditional low season in January, but the continued downtrend points to entrenched weak home-buying sentiment, analysts said.
Fitch Ratings said on Wednesday a Hong Kong court order to liquidate heavily indebted real estate giant China Evergrande (HK:) Group “is likely to be a lengthy process with high uncertainty and broader implications for creditors investing in Chinese issuers’ offshore debt and China’s property sector.”
That means homebuyers’ confidence in private developers is likely to take an even longer time to recover, with market share continuing to shift toward state-owned companies, the ratings agency added.
China’s official new home prices data for January, which is based on 70 cities, is due to be released on Feb. 23.