China’s Dec home prices decline further, more cities record falls

BEIJING: China’s new home prices fell for the fifth straight month in December as COVID-19 outbreaks hurt demand, but the dismantling of strict pandemic curbs and hope for more support measures have brightened the outlook.

New home prices in December declined 0.2% month-on-month, the same pace as in November, according to Reuters calculations based on National Bureau of Statistics (NBS) data released on Monday.

From a year earlier, prices dropped 1.5%, falling for the eighth month in a row and compared with a 1.6% slump in November. In December, 55 out of 70 cities saw a month-on-month decline in new home prices, four more than in November, the NBS said in an accompanying statement.

A flurry of property support measures for home buyers and developers in recent weeks, coupled with Beijing’s abrupt removal of its zero-COVID policy last month cheered the market, but continued sluggish demand still constrains the recovery.

The reopening of the economy has led to a wave of COVID infections, which are likely to hamper economic activity and strain households for at least several months.

China home prices fall at faster pace in December

The property sector, once a key driver of the world’s second-largest economy, was severely mired last year as debt-ridden developers failed to finish stalled projects and led to mortgage boycotts by some buyers.

Policymakers have rolled out a slew of supportive measures to prop up the sector. The central bank said earlier this month that for cities where the selling prices of new homes fall for three consecutive months, the floor on mortgage rates can be lowered or abolished for first-time home buyers in phases.

To relax restrictions on borrowing for property developers, regulators will improve the “three red lines” rule for 30 pilot firms, state media Xinhua reported last week. The policy restricts the amount of new borrowing property developers can raise each year by placing caps on their debt ratios.

Economists and analysts believe more support measures will be launched this year to stimulate home demand, as part of Beijing’s overall goal to bolster the $17-trillion economy after a sharp COVID-induced downturn in 2022.