Bewildering Rise in China’s Housing Market: An Impulsive Escalation
A Surprising Surge in New Home Prices
China’s new home prices in March experienced a rapid increase, reaching heights unseen in 21 months, as per official data unveiled on a recent Saturday. This development hints at a market revival, fueled by an array of supportive policies. However, experts remain uncertain about the durability of this momentum.
A Swift Climb: Fastest Pace since June 2021
In March, new home prices rose by 0.5% month-on-month, marking not only the quickest pace since June 2021 but also the third consecutive monthly ascent. The property sector, though, suffered greatly last year due to stringent regulations targeting developers’ soaring debt levels. Furthermore, certain buyers boycotted mortgage repayments, exacerbating weak consumer sentiment in the midst of strict COVID restrictions.
Major Cities: Unleashing Pent-up Demand
Home sales in major cities rebounded over the past month as China’s sudden rollback of COVID restrictions in December led to the release of pent-up demand. The property sector contributes approximately a quarter of China’s economy. The National Bureau of Statistics (NBS) survey of 70 cities revealed that 64 cities experienced an increase in new home prices on a monthly basis—the highest number of cities since May 2019, and an improvement from 55 in February.
The Broad-based Rise: All City Tiers on the Move
The hike in housing prices was extensive, encompassing all city tiers, with each extending month-on-month gains. Analysts, however, caution against premature conclusions about the sustainability of this budding property revival, citing concerns over consumer confidence. In the previous month, over 50 cities implemented stimulus policies or relaxed property regulations, introducing subsidies, augmenting housing provident funds, and easing home purchase restrictions.
Credit Data & Property Transactions: A Synchronized Acceleration
Credit data disclosed this week indicates that the growth of household medium-to-long term loans, primarily mortgages, quickened in March, aligning with enhanced property transactions. Earlier in April, the central bank published a quarterly survey of urban depositors, revealing that 17.5% of respondents intend to buy a home in the upcoming three months, up from 16% in the prior quarterly survey. On Tuesday, China will announce property sales, investment data for March, economic activity data, and first-quarter GDP figures.
