Early signs of stabilization in China's home prices despite steep fall

BEIJING, China: China's new home prices recorded their steepest annual drop in nine years this October, yet officials noted early signs of stabilization amid government efforts to support the struggling property sector.

New home prices fell 5.9 percent year-on-year, marking the 16th straight month of declines and the sharpest fall since 2015. However, the month-on-month decline slowed to 0.5 percent, the smallest drop since March, compared to a 0.7 percent dip in September, according to calculations based on data from the National Bureau of Statistics (NBS).

The slowdown in monthly declines was evident across tier-one, tier-two, and tier-three cities, the NBS said. Additionally, the percentage of survey respondents expecting home prices to stabilize or rise in the next six months surged by 17.6 percentage points to 75.9 percent, signaling a possible shift in sentiment.

Encouragingly, three cities reported annual growth in home prices, up from two in September. Officials attributed this to recent measures aimed at propping up the property market, which has been in turmoil since 2021.

An NBS spokesperson, Fu Linghui, said at a news conference that the property market was stabilizing, and there were early signs that home prices were bottoming, too. Fu also noted improvements in property developers' cash flows and expressed optimism about the sector's trajectory.

Despite these developments, analysts remain cautious about a potential recovery. "Property support measures do seem to be providing some relief to the housing market new home sales picked up by the most since May last month," Capital Economics' China economist Zichun Huang said in a note.

To boost demand, China's finance ministry recently introduced tax incentives aimed at reducing home purchase costs, while the central bank cut benchmark lending rates by 25 basis points in October. Policymakers also emphasized the need for timely delivery of pre-sold homes, a major concern for buyers. As of November 13, 2.85 million homes had been delivered nationwide, according to the housing regulator.

While property investment continued to decline from January to October, a narrowing slump in sales hinted at stabilization. Analysts, however, remain uncertain about whether these measures will lead to a sustained recovery in China's troubled property market.