BEIJING: New home prices across 100 Chinese cities increased in January, while secondary market declines eased, data from a leading property research firm revealed on Sunday. This uptick follows recent government commitments to steady the housing sector.
Monthly Price Trends
New home prices climbed 0.18 percent from the previous month, a slight slowdown from December’s 0.28 percent increase, according to the China Index Academy. Launches of premium upgraded housing in cities such as Chengdu, Shanghai, and Hangzhou boosted both monthly and yearly prices in first- and second-tier urban areas.
In contrast, third- and fourth-tier cities grappled with surplus inventory, leading to price drops on monthly and annual measures.
Resale Market Recovery
Resale prices dipped 0.85 percent month-on-month, a narrower fall than the 0.97 percent decline seen in December.
Property Sector Challenges
China’s housing market has faced headwinds since 2021, when stricter regulations sparked a liquidity crisis among developers, resulting in widespread debt defaults. Recent reports indicate developers no longer need to submit monthly data under the “three red lines” policy, suggesting a shift away from rules that fueled the debt turmoil.
The “three red lines” impose limits on debt-to-cash, debt-to-assets, and debt-to-equity ratios to curb excessive borrowing by developers, introduced in 2020. However, these measures triggered cash shortages, defaults, and broader economic strain, eroding buyer and investor confidence amid unfinished projects.
Government Response
On January 1, Qiushi, the Communist Party’s official publication, described the property sector as entering a “profound adjustment.” It urged policymakers to accelerate this process, mitigate market fluctuations, and provide comprehensive support rather than incremental aid.
Outlook for Sales
Sales may dip in February due to the Spring Festival holiday, but analysts expect a rebound in March. Factors include the release of prime land in major cities and intensified pre-holiday marketing efforts by developers.
