After showing signs of stabilising in December, China’s housing prices fell by an average of nearly 5.5 percent in February, compared to the same month a year ago. The faster fall in home prices came as China’s spring festival holiday combined with increasing consumer caution appear to be pushing the real estate market down an ever slipperier slope.
| City | Index | Y-o-Y Difference | M-o-M Difference | City Tier | Province |
|---|---|---|---|---|---|
| Anqing | 102.6 | -6.56% | -0.58% | Second | Anhui |
| Baotou | 104.7 | -7.35% | -1.97% | Third | Inner Mongolia |
| Beihai | 106.0 | -5.69% | -1.03% | Third | Guangxi |
| Beijing | 117.4 | -3.37% | -0.25% | First | Beijing |
| Bengbu | 101.0 | -7.17% | -1.27% | Third | Anhui |
| Changchun | 108.4 | -4.66% | -0.55% | Second | Jilin |
| Changde | 107.0 | -5.23% | -1.56% | Second | Hunan |
| Changsha | 112.9 | -7.91% | -0.70% | Second | Hunan |
| Chengdu | 107.3 | -5.88% | -0.65% | Second | Sichuan |
| Chongqing | 106.9 | -6.56% | -1.02% | Second | Chongqing |
| Dali | 102.8 | -4.19% | -0.87% | Third | Yunnan |
| Dalian | 109.0 | -7.55% | -1.09% | Second | Liaoning |
| Dandong | 107.9 | -8.56% | -2.35% | Third | Liaoning |
| Fuzhou | 111.4 | -7.17% | -1.24% | Second | Fujian |
| Ganzhou | 108.3 | -5.74% | 0.28% | Second | Jiangxi |
| Guangzhou | 121.8 | -5.51% | -0.16% | First | Guangdong |
| Guilin | 108.7 | -8.73% | -1.18% | Second | Guangxi |
| Guiyang | 109.7 | -3.52% | -0.63% | Second | Guizhou |
| Haikou | 97.7 | -6.15% | -1.11% | Second | Hainan |
| Hangzhou | 91.7 | -10.45% | -0.65% | Second | Zhejiang |
| Harbin | 108.7 | -5.07% | -1.00% | Second | Heilongjiang |
| Hefei | 110.4 | -2.65% | -0.45% | Second | Anhui |
| Hohhot | 107.6 | -6.68% | -1.19% | Second | Inner Mongolia |
| Huizhou | 106.9 | -6.80% | -1.11% | Third | Guangdong |
| Jilin | 109.1 | -5.38% | -1.00% | Second | Jilin |
| Jinan | 108.0 | -4.85% | -0.46% | Second | Shandong |
| Jinhua | 97.9 | -6.23% | -1.01% | Second | Zhejiang |
| Jining | 109.1 | -3.96% | -0.55% | Second | Shandong |
| Jinzhou | 107.3 | -8.13% | -2.01% | Third | Liaoning |
| Jiujiang | 103.5 | -5.91% | -1.52% | Third | Jiangxi |
| Kunming | 108.7 | -4.90% | -0.64% | Second | Yunnan |
| Lanzhou | 111.6 | -3.79% | -0.80% | Second | Gansu |
| Luoyang | 109.9 | -5.75% | -1.26% | Second | Henan |
| Luzhou | 105.0 | -7.65% | -0.57% | Third | Sichuan |
| Mudanjiang | 109.6 | -3.35% | -0.63% | Third | Heilongjiang |
| Nanchang | 111.2 | -5.92% | -0.63% | Second | Jiangxi |
| Nanchong | 105.6 | -6.13% | -0.75% | Second | Sichuan |
| Nanjing | 110.3 | -2.56% | -0.18% | Second | Jiangsu |
| Nanning | 106.4 | -5.51% | -0.75% | Second | Guangxi |
| Ningbo | 94.1 | -6.18% | -0.53% | Second | Zhejiang |
| Pingdingshan | 109.1 | -5.21% | -0.82% | Second | Henan |
| Qingdao | 101.6 | -7.97% | -1.36% | Second | Shandong |
| Qinhuangdao | 108.4 | -6.07% | -1.19% | Third | Heibei |
| Quanzhou | 99.7 | -8.20% | -2.16% | Second | Fujian |
| Sanya | 101.3 | -5.06% | -0.69% | Second | Hainan |
| Shanghai | 115.6 | -4.30% | -0.17% | First | Shanghai |
| Shaoguan | 104.0 | -8.53% | -1.23% | Third | Guangdong |
| Shenyang | 109.6 | -8.82% | -0.81% | Second | Liaoning |
| Shenzhen | 124.2 | -1.11% | 0.57% | First | Guangdong |
| Shijiazhuang | 115.3 | -4.32% | -0.52% | Second | Hebei |
| Taiyuan | 109.9 | -4.93% | -0.54% | Second | Shanxi |
| Tangshan | 99.1 | -4.34% | -1.00% | Second | Heibei |
| Tianjin | 108.3 | -3.65% | -0.28% | Second | Hebei |
| Urumqi | 118.3 | -4.75% | -0.67% | Second | Xinjiang |
| Wenzhou | 76.6 | -4.13% | -1.16% | Second | Zhejiang |
| Wuhan | 111.1 | -4.47% | -0.09% | Second | Hubei |
| Wuxi | 101.8 | -5.13% | -0.88% | Second | Jiangsu |
| Xi’an | 110.6 | -4.74% | -0.98% | Second | Shaanxi |
| Xiamen | 126.1 | 0.72% | -0.24% | Second | Fujian |
| Xiangyang | 108.2 | -6.32% | -1.19% | Second | Hubei |
| Xining | 116.2 | -4.28% | -1.19% | Third | Qinghai |
| Xuzhou | 107.8 | -4.94% | -0.74% | Second | Jiangsu |
| Yangzhou | 104.9 | -6.26% | -0.94% | Third | Jiangsu |
| Yantai | 105.4 | -6.31% | -1.13% | Second | Shandong |
| Yichang | 109.1 | -5.38% | -0.27% | Third | Hubei |
| Yinchuan | 109.9 | -4.18% | -0.81% | Third | Ningxia |
| Yueyang | 110.9 | -3.06% | -0.63% | Second | Hunan |
| Zhanjiang | 109.7 | -7.11% | -1.79% | Second | Guangdong |
| Zhengzhou | 119.6 | -0.91% | -0.50% | Second | Henan |
| Zunyi | 108.4 | -4.58% | -1.28% | Second | Guizhou |
The drop in home prices was reported by China’s National Bureau of Statistics today in a regular monthly survey of 70 major cities, and was the most severe decrease since the study was first conducted in 2011.
During the last few months China’s government has taken a number of steps to stimulate housing demand, and consumption in general, including twice cutting benchmark interest rates. The fall in housing prices, which was reported just days after the Bureau revealed a 17.8 percent drop in housing sales, seems to indicate that the government’s measures have so far failed to turn around the nation’s housing slump.
Prices Fall in 66 of 70 Cities
While most analysts expect China’s real estate market to improve as it moves away from the Chinese New Year holiday period, February’s results were a disappointing follow up on the Bureau’s December report, which had appeared to show the housing slump ameliorating. (The Bureau did not issue a report on January housing prices due to the holiday last month).
In all, 66 out of 70 cities included in the survey reported falling housing prices for new housing excluding subsidise housing, while Shenzhen and the city of Ganzhou in Jiangxi province reported price increases, and two more cities indicated that prices were flat. In December, 65 cities had reported falling prices, with only Shenzhen seeing prices climb, while four other cities reported a stable market.
On a monthly basis, average housing prices fell in February by more than double the 0.40 percent drop from November to December, with the Bureau reporting a 0.86 percent decrease in average prices across the cities surveyed. The severity of the decline is hard to measure, however, without the government office having published January data.
First Tier Cities Not Exempt From Price Declines
Shenzhen again reported the strongest results in the survey, which is collated from local government reports, with the southern Chinese city indicating that average prices rose 0.57 percent in February, compared to December.
All three of China’s remaining first-tier cities suffered declines, with Beijing prices falling fastest at 0.25 percent, while rates in Shanghai and Guangzhou fell by 0.17 and 0.16 percent respectively.
The city of Dandong in Liaoning province saw prices fall at the fastest rate among the cities surveyed, with a decline in average housing prices of 2.35 percent compared to December.
Is a Stimulus a Stimulus If There’s No Response?
Given the capacity for China’s Spring Festival holiday to wreak havoc on any business, results from February need to be examined with the impact of the holiday in mind.
However, given the measures that China has taken to pump up demand, including injecting more liquidity into the banking system, revising lending rules, and cutting benchmark interest rates, we would normally expect the housing slump to be tapering off, rather than picking up pace.
With the market instead falling at its fastest rate, ever we can expect more rate cuts and reductions in the bank reserve ratio requirements in the coming months, at least until developers have made some meaningful progress in selling down their record levels of housing inventory.
The risk to watch for is if the steps to increase liquidity and reduce financing costs fail to bring buyers back into the market. Such a stimulus with no response situation could have a serious impact on confidence among both businesses and consumers.
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