China’s housing prices fell for the eighth straight month in December, according to data released today by the National Bureau of Statistics. However, the average monthly rate of decline in prices of new housing (including subsidised units) slowed slightly – to 0.4 percent – and fewer cities reported falling prices than last month.
Despite being rocked by shutdowns of sales at several projects, the southern Chinese metropolis of Shenzhen reported the only rise in average housing prices nationwide, with prices said to have risen 1.23 percent in December, compared to November.
Coming after China’s central bank had cut interest rates in late November, December’s home sales could be taken as the first full-month test of the government’s latest attempt to rekindle housing demand and end a nearly year-long housing slump.
The report from the statistics office this month was notably more optimistic than private studies of December housing sales released earlier by information providers belonging to Soufun and e-House.
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Fewer Cities Report Price Slides in December
For sales of all new housing in December (including subsidised apartments), Shenzhen led the way as the only city among the 70 communities surveyed by the bureau to report a price increase. However, the cities of Ganzhou in Jiangxi, Tangshan in Hebei, Wuhan in Hunan and Zhengzhou in Henan all reported flat prices for the month. The 65 other cities all reported declines in average housing prices.
However, these numbers still represent big improvements over previous months, as only Hefei in Anhui and Nanjing in Jiangsu failed to report declining prices in November, and even those two cities only managed to have prices remain stable. In October, all 70 cities surveyed reported declining prices.
Compared to a year earlier, however, there has still been a major drop in prices with average rates down -4.3 percent on average nationwide. Hangzhou prices are down the most year-on-year with average prices in the capital of Zhejiang province down -9.95 percent.
Are Price Declines Slowing or Accelerating?
The NBS numbers appear to show a steady line of diminishing price declines nationwide for December, with average prices falling only 0.4 percent, compared to a drop of 0.57 percent in November, and a 0.97 percent decline in October. Xiamen and Zhengzhou are the only cities to report higher prices for December 2014 compared to December 2013, with Xiamen still up 2.1 percent over a year earlier and Zhengzhou hanging in there with a 0.17 percent increase in the last 12 months.
This improvement makes it look like government attempts to stimulate demand for housing and improve availability of mortgage credit may be achieving traction so that developers no longer need to discount as deeply to attract buyers.
However, the private survey of December housing prices published by China Index Academy at the beginning of this month showed rates of price decline accelerating in December to -0.44 percent compared to -0.38 percent in November.
Shenzhen Improvement Comes at a Surprising Time
The rapid improvement in Shenzhen housing prices comes at a time when most might expect consumers to be holding off on any new home purchases.
Leading Shenzhen developer Kaisa announced on December 4th that the authorities had forbidden further sales at three of its projects in the city, and a fourth development was locked down later in the month. The developer later defaulted on debt obligations and in recent days there have been reports of several more developers having projects frozen by the government with buyers left with no word of when homes that they had purchased may be complete.
In November, Shenzhen had reported a decline in home sales of -0.08 percent.