China’s government appears to be successfully putting the brakes on its sliding housing market as the rate of decrease in home prices slackened for the third straight month in November.
However, while the skid is slowing, moves to loosen home purchase restrictions and promote more lending have yet to stop the downward trend in housing prices that started in May of this year, according to figures released today by China’s National Bureau of Statistics
Home Prices Fell for Seventh Straight Month
On average, prices of new homes (including subsidised housing) fell by 0.57 percent in November compared to the previous month. This was the third month in a row of slower rates of decrease after October prices slid by 0.78 percent and September prices fell by 0.97 percent.
Although 68 of the 70 cities surveyed by the government reported average price drops, this is still a slight improvement over October’s numbers, when 70 cities reported falling prices. Both Zhengzhou in Henan province and Hefei in Anhui province reported stable prices for November.
Nationwide, average home prices have now been declining since May of this year, according to the Bureau’s figures.
On a year to year basis, average home prices were down by 3.56 percent compared to November 2013, the third straight month that China has seen home prices lower than they were the previous year.
| City | Index | Y-o-Y Difference | M-o-M Difference | City Tier | Province |
|---|---|---|---|---|---|
| Anqing | 103.7 | -4.95% | -0.96% | Second | Anhui |
| Baotou | 107.3 | -4.54% | -0.74% | Third | Inner Mongolia |
| Beihai | 107.2 | -3.51% | -0.92% | Third | Guangxi |
| Beijing | 117.9 | -2.00% | -0.17% | First | Beijing |
| Bengbu | 102.7 | -5.26% | -0.68% | Third | Anhui |
| Changchun | 109.5 | -2.93% | -0.64% | Second | Jilin |
| Changde | 108.9 | -2.51% | -0.37% | Second | Hunan |
| Changsha | 114.5 | -5.68% | -0.95% | Second | Hunan |
| Chengdu | 108.3 | -4.24% | -0.55% | Second | Sichuan |
| Chongqing | 108.3 | -4.83% | -0.55% | Second | Chongqing |
| Dali | 104.3 | -2.43% | -0.57% | Third | Yunnan |
| Dalian | 111.3 | -4.71% | -1.42% | Second | Liaoning |
| Dandong | 111.1 | -4.96% | -1.24% | Third | Liaoning |
| Fuzhou | 113.1 | -4.64% | -0.44% | Second | Fujian |
| Ganzhou | 108 | -5.26% | -0.55% | Second | Jiangxi |
| Guangzhou | 122.3 | -3.78% | -0.41% | First | Guangdong |
| Guilin | 110.9 | -6.02% | -1.33% | Second | Guangxi |
| Guiyang | 110.8 | -2.03% | -0.45% | Second | Guizhou |
| Haikou | 99.5 | -3.68% | -0.30% | Second | Hainan |
| Hangzhou | 92.6 | -9.48% | -0.32% | Second | Zhejiang |
| Harbin | 110.3 | -3.25% | -0.36% | Second | Heilongjiang |
| Hefei | 111 | -0.54% | 0.00% | Second | Anhui |
| Hohhot | 109.9 | -3.77% | -0.99% | Second | Inner Mongolia |
| Huizhou | 108.7 | -3.98% | -0.46% | Third | Guangdong |
| Jilin | 110.5 | -3.41% | -0.27% | Second | Jilin |
| Jinan | 108.9 | -3.20% | -0.37% | Second | Shandong |
| Jinhua | 99.3 | -4.34% | -0.30% | Second | Zhejiang |
| Jining | 110 | -2.48% | -0.36% | Second | Shandong |
| Jinzhou | 110.1 | -5.09% | -0.99% | Third | Liaoning |
| Jiujiang | 105.4 | -3.48% | -0.28% | Third | Jiangxi |
| Kunming | 109.9 | -2.83% | -0.63% | Second | Yunnan |
| Lanzhou | 112.7 | -2.59% | -0.35% | Second | Gansu |
| Luoyang | 112 | -3.03% | -0.36% | Second | Henan |
| Luzhou | 107 | -4.63% | -0.47% | Third | Sichuan |
| Mudanjiang | 110.9 | -1.68% | -0.27% | Third | Heilongjiang |
| Nanchang | 112.3 | -4.34% | -0.35% | Second | Jiangxi |
| Nanchong | 106.9 | -3.95% | -0.74% | Second | Sichuan |
| Nanjing | 110.7 | -1.42% | 0.00% | Second | Jiangsu |
| Nanning | 107.8 | -3.32% | -0.28% | Second | Guangxi |
| Ningbo | 95 | -4.43% | -0.42% | Second | Zhejiang |
| Pingdingshan | 110.5 | -2.99% | -0.81% | Second | Henan |
| Qingdao | 103.9 | -4.77% | -0.95% | Second | Shandong |
| Qinhuangdao | 110 | -4.10% | -0.45% | Third | Heibei |
| Quanzhou | 102.4 | -4.74% | -1.16% | Second | Fujian |
| Sanya | 102.7 | -3.20% | -0.68% | Second | Hainan |
| Shanghai | 116.1 | -2.93% | -0.43% | First | Shanghai |
| Shaoguan | 105.9 | -7.27% | -0.75% | Third | Guangdong |
| Shenyang | 111.5 | -6.69% | -1.24% | Second | Liaoning |
| Shenzhen | 122 | -2.01% | -0.08% | First | Guangdong |
| Shijiazhuang | 116.1 | -2.85% | -0.17% | Second | Hebei |
| Taiyuan | 111 | -2.97% | -0.36% | Second | Shanxi |
| Tangshan | 100.1 | -2.82% | -0.10% | Second | Heibei |
| Tianjin | 108.8 | -2.33% | -0.27% | Second | Hebei |
| Urumqi | 119.7 | -2.68% | -0.75% | Second | Xinjiang |
| Wenzhou | 77.8 | -5.47% | -0.51% | Second | Zhejiang |
| Wuhan | 111.2 | -3.64% | -0.36% | Second | Hubei |
| Wuxi | 102.9 | -3.65% | -0.58% | Second | Jiangsu |
| Xi’an | 112.2 | -2.43% | -0.71% | Second | Shaanxi |
| Xiamen | 127 | 2.92% | -0.47% | Second | Fujian |
| Xiangyang | 109.9 | -4.27% | -0.72% | Second | Hubei |
| Xining | 118 | -1.26% | -0.42% | Third | Qinghai |
| Xuzhou | 108.9 | -3.63% | -0.64% | Second | Jiangsu |
| Yangzhou | 106.2 | -4.15% | -0.38% | Third | Jiangsu |
| Yantai | 107.4 | -3.50% | -0.83% | Second | Shandong |
| Yichang | 110 | -3.93% | -0.90% | Third | Hubei |
| Yinchuan | 111.1 | -2.29% | -0.89% | Third | Ningxia |
| Yueyang | 112 | -1.75% | -0.53% | Second | Hunan |
| Zhanjiang | 112.6 | -4.17% | -1.05% | Second | Guangdong |
| Zhengzhou | 120.2 | 0.33% | -0.17% | Second | Henan |
| Zunyi | 110 | -2.57% | -0.45% | Second | Guizhou |
Policy Changes Start to Bring Results
The lower rates of decrease in prices are good news for China’s government and seem to indicate that the moves it has taken to free up more customers to buy homes and to promote more mortgage lending are paying off.
While the central bank’s interest rate cut on November 21st probably came to late to have too much impact on sales for the month, the government has already been busy since mid-year trying to free up more cash for home purchases.
During August and September the government began reintroducing mortgage discounts and took steps to ensure greater availability of mortgage credit. These moves came after the loosening of home purchase restrictions earlier in the year failed to rein in the housing price slide.
The market may also have been helped by some seasonal variation in buyer behavior, as November is traditionally one of the strongest months for home sales.
First Tier Cities Not Immune to Housing Troubles
With nearly all of the cities reporting price decreases and no increases in prices in any of the commmunities surveyed, there doesn’t seem to be anywhere in China that is exempt from the current downturn.
Among the first tier cities, Shenzhen reported the strongest results for the second month in a row, with prices in the southern metropolis falling by 0.08 percent, compared to the next strongest of China’s big four cities – Beijing – which saw prices fall by 0.17 percent.
Shanghai improved only very slightly over October’s 0.51 percent price decline to record a 0.43 percent fall in November. Guangzhou made better progress in November, improving to a 0.41 decrease in average prices after reporting one of the country’s sharpest drop-offs in October when prices in the southern metropolis slid by 1.21 percent.
This month Dalian reported the fastest dropping markets among the cities surveyed, with average home prices falling by 1.42 percent in the northeastern Chinese city.
Still Far to Go Before Achieving Recovery
While the government seems to have been successful in stanching the slowdown in the real estate market, it still be some time before China sees a return to rising prices.
According to figures released by the National Bureau of Statistics last week, the country now has 597.95 million square metres of housing available for sale. The backlog of unsold homes is a new record, and is up by 15.56 million square metres since the end of October.
Just last weekend, Vanke CEO Yu Liang cautioned observers from expecting too much from China’s home market too soon. Speaking to the media in Hong Kong, the chief executive of China’s biggest developer by sales estimated that there is now a 13 month supply of unsold housing inventory, which will make it difficult for developers to raise prices anytime soon.
With this sizable existing backlog and a large pipeline of additional projects on the way, it may be well into the second half of 2015 before China’s real estate prices again begin to ascend nationwide.
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