Home prices in major Chinese cities continued to slightly narrow their declines in January, suggesting that Beijing’s policy blitz may have helped stabilize the beleaguered real-estate sector.
Average home prices in the 70 cities surveyed by the government dropped 0.07% in January from the previous month, versus the 0.08% decline recorded in December, according to calculations by The Wall Street Journal based on data released Wednesday by the National Bureau of Statistics.
There were 42 cities reporting month-over-month home price falls last month, down from 43 in December.
Compared with a year ago, average home prices in the major cities dropped 5.4% in January, narrowing from the 5.7% decrease recorded in December. Of the 70 cities, 68 reported year-over-year price declines last month, the same as in December.
Though the data signals some slight improvements, caution about the sector’s outlook prevails, with property likely to keep weighing on China’s economic growth.
For Nomura analysts, the extension of price declines into 2025 lends further support to their long-held view that the property meltdown has yet to end.
While average prices of new and existing homes in Tier 1 cities continued to improve sequentially, the pace slowed, and existing home prices in lower-tier cities continued to fall, Nomura’s Hannah Liu and others wrote in a note.
Since the policy pivot that began in September, ramped-up efforts to counteract the property downturn do seem to have been more effective in boosting home sales and stabilizing prices of secondary homes than previous rounds, Goldman Sachs economists said. But more easing measures are needed to sustain that stabilization, Andrew Tilton and others said in a note.
Property markets in lower-tier cities still face strong headwinds from weaker growth fundamentals, including severe oversupply, Goldman Sachs said, adding that the divergence between larger and smaller cities is likely to persist.
“Given the persistent structural divergences in the property sector and still-limited policy support for housing destocking, we maintain our view that the property sector may remain a growth drag in coming years,” the economists said.
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(END) Dow Jones Newswires
February 19, 2025 00:08 ET (05:08 GMT)
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