BEIJING – China’s new home prices fell for the first time in months since December, according to official data on Wednesday, frustrated by fragile demand in small towns and a drastic, extensive COVID-19 lockdown.
According to Reuters calculations based on April data from the National Bureau of Statistics (NBS), average new home prices in 70 major cities fell 0.2% compared to zero growth in March.
New home prices rose 0.7% year-on-year, the slowest pace since October 2015 and eased to 1.5% profit in March.
In recent months, the outlook for the Chinese property market has been bleak. The market, one of the pillars of the world’s second-largest economy, has been weakened by the government’s clampdown on excessive borrowing from developers.
In the past month, more than 40 cities have taken steps to increase home buyers’ interest, including subsidies, mortgage rate reductions and the approval of large loans from the Provident Housing Fund.
The northern city of Tianjin issued a draft proposal on April 24 to increase the maximum loan for first-time home buyers from 600,000 yuan to 800,000 yuan ($ 120,000) from such a fund.
Chinese financial authorities on Sunday allowed mortgage lenders to cut interest rates further for some home buyers.
In April, 47 new home prices fell out of 70 cities surveyed by NBS, down from 38 in March.
New home prices fell 0.6% month-on-month in Tier-Three and Tier-Four cities, extending from a 0.2% drop in March.
Prices fell 0.1% in cities like Chengdu and Nanjing, compared to zero growth in March. In Tier-One cities, such as Shanghai and Beijing, prices rose 0.2% in March, compared with a 0.4% increase.
“Housing prices have dropped in more cities in April. The housing sector is going through a crisis, ”said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
“Government policy has been more supportive but not irresistible. There are still a lot of restrictions. ”
COVID-19 outbreaks and prolonged lockdowns in dozens of cities have already weighed heavily on vulnerable property markets.
Shanghai has endured a lockdown for almost seven weeks. It plans to phase out outdoor activities and lift the lockdowns by June.
“Household incomes have probably suffered because of the Omicron outbreak, and the lockdowns have made housing transactions and investments difficult,” Zhang said.
“It’s not clear when the housing sector will recover.”
For April, new home prices in Shanghai remained unchanged from a month earlier. They were rising from November 2020.
The April data, released on Monday, showed a decline in property sales and investment, adding to the uncertainty over the outlook for the property market.
Property sales in April fell 46.6% year-over-year, the biggest fall since August 2006, and worse than the 26.17% fall in March.
($ 1 = 6.7460 yuan) (Reporting by Liangping Gao and Ryan Wu; Editing by Bradley Parrett)