China’s new home prices dropped 5.9% year-on-year in October, marking the steepest decline since 2015, but monthly declines slowed to 0.5%, indicating stabilization. Government support measures, including tax incentives and rate cuts, are showing impact, with improved developer cash flows and buyer sentiment signalling potential recovery in the real estate market.
China's new home costs witnessed the biggest year-on-year decline in October since 2015, but a decreasing monthly rate of declines indicated the property market was starting to stabilize with a flurry of government assistance.
In yearly terms, new home costs decreased 5.9 per cent in October, their 16th continuous month of decreasing, following a 5.8 per cent dip in September.However, month-on-month, new home costs were lower 0.5 per cent in their slowest decrease since March, after declining 0.7 per cent in September, calculations based on National Bureau of Statistics (NBS) data.
NBS stated 75.9 per cent of its respondents in its poll anticipate new home costs to be constant or increase in the next six months, which is a sign of a potential change in sentiment, an increase of 17.6 percentage points from the last poll.October saw increases in year-over-year housing prices in three of the 70 cities surveyed, compared to two the month before.
The government stated that the data revealed policies were made to help the real estate sector, which experienced a crisis in 2021, were beginning to have an impact.The real estate market was stabilizing and there were preliminary indications that home prices were also bottoming out, Fu Linghui, an NBS spokesperson stated.
The bureau was hopeful about the trend and the cash flows of real estate developers were also improving, Fu stated.Property investment declined more quickly from January to October but sales reduced the decline, according to the separate official data.
However, Huang mentioned that unless local governments' actions are "followed by significant fiscal easing next year, which appears unlikely, the boost is likely to be short-lived."
The finance ministry announced new tax incentives on Wednesday to reduce the prices of home purchase and boost demand, in order to revitalize the sector.To increase demand, China lowered benchmark lending rates by 25 basis points in October. One of the main concerns for homebuyers is the prompt delivery of pre-sold properties, which policymakers promised to push for. As of November 13, overall, 2.85 million homes had been delivered across the nation, the housing regulator stated previously this week.
