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New home prices in China increased slightly in January, while declines in the resale market narrowed, reflecting cautious optimism in the property sector. First- and second-tier cities such as Shanghai, Chengdu, and Hangzhou saw high-end housing launches, supporting both monthly and yearly price gains. In contrast, third- and fourth-tier cities continued to face falling prices as inventory remained high. Recent government signals, including reduced reporting requirements under the three red lines policy and calls to stabilize the market, indicate ongoing efforts to support the sector. Sales may dip during the Spring Festival but are expected to rise afterward.
Average prices of new homes across 100 Chinese cities rose modestly in January, while declines in the secondary market became less severe, according to a private survey conducted by the China Index Academy, one of the country's largest property research firms. The survey reported a 0.18% month-on-month increase in new home prices, slightly lower than December's 0.28% growth. Advertisement
First- and second-tier cities, including Shanghai, Chengdu, and Hangzhou, saw the launch of upgraded high-end residential projects in January, contributing to both monthly and annual price increases. In contrast, third- and fourth-tier cities continued to manage high levels of unsold inventory, leading to price declines on both a monthly and yearly basis.
Resale or secondary market prices fell 0.85% from the previous month, narrowing from a 0.97% decline observed in December. The Chinese property sector has faced challenges since 2021, when tighter regulations led to a liquidity crunch for developers. Many developers defaulted on debt during this period, affecting market confidence.
Local media recently highlighted that developers are no longer required to report monthly data under the country's three red lines policy. This move is seen as a potential end to the rules that contributed to the ongoing debt crisis in the sector. Earlier this year, Qiushi, the Communist Party's official journal, described the property market as undergoing a profound adjustment and urged policymakers to shorten the adjustment period, stabilize market fluctuations, and deliver support in a single, coordinated effort rather than piecemeal measures.
The China Index Academy noted that sales are expected to slow during February due to the Spring Festival holiday, but demand is likely to rise in March as high-quality land in major cities becomes available and developers intensify pre-holiday promotions.
Source Reuters
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