China’s struggling housing market showed tentative signs of recovery in November, with home prices falling at their slowest pace in 17 months. This improvement suggests that government efforts to bolster the real estate sector might be starting to yield results. According to data released by the National Bureau of Statistics, new home prices dipped just 0.1% in November compared to the previous month. This marks a significant slowdown in the decline compared to the 0.5% drop recorded in October and represents the most moderate decrease since June 2022.
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Year-Over-Year Decline Narrows as Government Support Takes Hold
While new home prices continued their year-over-year decline in November, the rate of decrease narrowed to 5.7% compared to 5.9% in October. This positive trend aligns with the expectations of analysts like Lynn Song, chief economist for Greater China at ING, who anticipates the market bottoming out in 2025, followed by an L-shaped recovery. The Chinese government has implemented a series of measures since 2021 to address the ongoing property crisis, sparked by a crackdown on heavily indebted developers. These measures, intensified in recent months, include reductions in mortgage rates and down payment requirements, alongside tax incentives designed to lower transaction costs for homebuyers.
Tier One Cities Lead the Recovery, Smaller Cities Lag Behind
The November data revealed a growing number of cities experiencing month-on-month price increases. Out of the 70 cities surveyed, 17 saw rising home prices, a significant jump from the seven cities that reported increases in October. Leading the recovery are major metropolitan areas like Shanghai and Shenzhen, which posted month-on-month price gains of 0.6% and 0.3%, respectively. This upswing is attributed in part to the implementation of tax breaks aimed at stimulating housing demand. However, the recovery remains uneven, with prices continuing to fall in many smaller cities, highlighting the challenges still facing the broader market. Beijing, for example, experienced a 0.5% decline in home prices in November.
Long-Term Recovery Hinges on Broader Economic Factors
Experts caution that a sustained recovery in the property market will depend on more than just government intervention. Factors such as income stability, demographic trends, and the substantial backlog of unsold properties will play a crucial role in shaping the market’s trajectory. Zhang Dawei, an analyst at Centaline, a prominent property agency, emphasizes that further policy adjustments and time will be needed to achieve broad market stabilization. This perspective is underscored by the continued double-digit declines in property investment and sales during the January-November period.
Looking Ahead: Focus on Land Supply and Affordable Housing
Recognizing the importance of a stable property market for overall economic health, China’s leadership has pledged further action. During the recent Central Economic Work Conference, a key policy-setting meeting, officials outlined plans to control land supply and facilitate local government purchases of unsold new homes for affordable housing. These initiatives signal a continued commitment to addressing the challenges in the real estate sector and supporting its gradual recovery. The long-term outlook for China’s property market remains subject to various economic factors and the effectiveness of ongoing government interventions. While recent data provides a glimmer of hope, the road to full recovery is expected to be gradual and potentially uneven across different regions.
