China’s housing prices climbed in January for the first time since April, as looser monetary policies seem to be coaxing buyers back into the market.
New home prices climbed by an average of 0.21 percent last month compared to December, according to a survey released yesterday by the China Index Academy, the research unit of online real estate platform Soufun.
The uptick in prices – after new home sellers had seen rates fall by 0.44 percent in December compared to November – comes after the government has gradually been introducing more and cheaper credit into the market.
Despite the month to month rise in prices, however, on an annualised basis the market was still down 3.09 percent in January compared to the same month last year.
Reviving a Key Sector After GDP Slumps
The modest recovery in housing prices comes after the government has taken a number of measures in recent months to encourage home buyers to get back into the market, including injecting more liquidity into the banking system, cutting interest rates and revising lending rules.
Further selective stimulus measures such as these are expected in 2015 after China fell short of its GDP growth target for the first time in 15 years – reaching only 7.4 percent growth in 2014, rather than the 7.5 percent that it had planned on.
Many analysts believe that actual growth may have been much lower than the government estimates, and the slowdown in the real estate market played a significant role in the economic slump.
Prices Still Falling in Most Cities
Soufun’s survey covers 100 of China’s largest cities, and found that home prices averaged RMB 10,564 ($1,690) per square metre in these communities.
While the average price was up, this wasn’t the case everywhere. 56 of the cities surveyed reported that prices were still falling on a month to month basis, although this still represents an improvement over December, when 70 cities reported falling prices.
Beijing, Shanghai and Shenzhen are already seeing their markets gain ground on a year to year basis, with Shanghai showing the strongest recovery. China’s commercial capital reported a 1.92 percent increase over January 2014 with average home prices reaching RMB 32,278 per square metre.
Outlook for the Year Still Cautious
While average prices rose this month, many analysts continue to project a tough year for China’s real estate industry as developers struggle to sell off a record 40 million square metres of unsold homes.
In a report released at the end of December, government-backed think tank China Academy of Social Sciences predicted that the country’s real estate prices would drop another five percent in 2015.
With Chinese New Year coming in late February this year, the current month is likely to see low levels of activity, with average price growth most likely going negative again at least for the month.
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