Housing prices continued to fall last month across China, but the rate of decline decreased by more than half following government moves to ease credit.
A survey published on Friday by a real estate data provider belonging to Soufun indicated that average new home prices in China fell by 0.4 percent in October, compared to a 0.9 percent decline in September. October was the sixth month in a row that the survey had reported declining prices, following record increases throughout much of 2013.
During September China’s government expanded the availability of mortgage financing in an effort to stanch a decline in real estate sales that was threatening to bring down overall GDP growth. According to one recent survey, this easier lending has sparked an increase in sales that may account at least in part for the slower decline in prices.
Some Chinese Cities See Home Prices Rebounding
According to an account in the Wall Street Journal, out of the 100 cities included in the study by China Real Estate Information System (CREIS), 73 reported price declines in October, down from 79 out of 100 in September. The September dropoff in prices was the steepest ever recorded by the four year old survey.
The months long slide in home prices has started to take a toll on home values, however, with average new home prices down 0.52 percent in October compared to the same month last year – the first time in over two years that the CREIS survey had reported a month on month decline.
Home Sales on the Upswing Following Credit Tweaks
The change in the rate of decline in home prices appears to be triggered by a number of recent move that China’s state-controlled banks have made to expand the availability of mortgage credit.
After home prices began declining in May, as early as July the authorities began to reintroduce discounted mortgages, and at the end of last month, eligibility for mortgage financing was greatly expanded. The credit moves came after a nearly nationwide repeal of home purchase restrictions failed to spark the market.
By October the number of cities making available discounted mortgages had more than doubled, and home buyers seem to have been quick to climb back into the market.
A survey by a market research agency belonging to the Financial Times found that home sales growth in October was the highest in 18 months. The poll, which queried 300 Chinese real estate developers found the property firms reporting their biggest increase in sales since 2013, and an increase in inquiries from potential buyers as well.
The latest numbers on homes sales from China’s National Bureau of Statistics show that the rate of decline in home sales had slowed during September, but had not yet begun to rebound. The Bureau’s home sales figures for October will be released later this month.
New home sales in China typically peak during September and October, so an increase in sales is not entirely surprising, although the impact on home prices may be limited by developer plans to release an unusually large pipeline of new projects onto the market in the coming months.