China’s Real Estate Market Shows Signs of Stabilizing as New-Home Prices Remain Stable in February
China’s real estate market has been a cause of concern for the country’s economy, which has been struggling to recover from the COVID-19 pandemic. However, there are signs that the market may be stabilizing as new-home prices in 100 major cities remained unchanged at 16,174 yuan ($2,322) per square meter in February, ending seven consecutive months of declines. The data from China Index Holdings Ltd., a property consultant, shows that new-home prices in first-tier cities such as Beijing and Shanghai continued to climb slightly month-on-month, while prices in smaller second-tier cities such as Chengdu and Changsha ended their recent declines and rose 0.01%.
The stability in new-home prices could be attributed to the Chinese government’s measures to support the real estate market, which have been ongoing since last year. The government has relaxed restrictions on home buyers and provided easier access to funds for developers to complete stalled projects. These policies have helped to boost the market, both on the supply and demand sides.
The ongoing “Two Sessions” meetings in Beijing could bring further policies to boost the market. According to China Index Holdings, policies on the supply and demand sides could be announced after the meetings. It remains to be seen what kind of policies will be implemented, but any new measures could have a significant impact on the real estate market and the economy as a whole.
The weakness in the real estate sector has been weighing on China’s economy for some time now. The sector has been a key driver of growth for the country in recent years, but it began to slump in mid-2021 after Beijing took steps to curb excessive borrowing, depriving builders of funds. The decline in the real estate market has had a ripple effect on related sectors such as construction, manufacturing, and finance.
The stability in new-home prices is a positive sign for the real estate market and the economy as a whole. However, it remains to be seen whether this trend will continue in the coming months. The Chinese government will need to continue to provide support for the market to ensure that it remains stable.
Table: New-home prices in 100 major cities in China (yuan per square meter)
There was a steep decline in prices from mid-2021 to the end of 2021, but prices have stabilized in 2022. The stability in prices in February 2022 is a positive sign for the real estate market and the economy as a whole. However, it remains to be seen whether this trend will continue in the coming months. The Chinese government will need to continue to provide support for the market to ensure that it remains stable.
