The new home prices in China continued to rise for the ninth consecutive month in May, as reported by a private survey. This increase was attributed to the various steps taken by the government to support the crisis-hit property sector. The average new home price across 100 cities saw a 0.25% increase in May, following a 0.27% gain in April, according to data from the China Index Academy.
China’s property sector, which is a key component of the economy, has been facing significant challenges since 2021. The sector has been plagued by a series of crises due to a regulatory crackdown on high leverage among developers, leading to a liquidity crisis. As a result, the government has been under pressure to stimulate home sales and increase liquidity in the market.
Government Measures
In an effort to stabilize the property sector, China announced several measures in mid-May that were described as “historic.” These measures included easing mortgage rules and providing an additional 1 trillion yuan ($140 billion) in funding. Additionally, local governments committed to purchasing apartments to provide further support to the market. These steps were seen as crucial in boosting homebuyer demand and preventing further declines in housing prices.
Investors welcomed the government intervention and viewed it as a signal of more proactive measures to come. The hope is that these initiatives will not only support the property sector but also have a positive impact on the overall economy. By addressing the liquidity issues and implementing supportive policies, the government aims to prevent a further deterioration in the housing market.
The ongoing rise in new home prices in China reflects the resilience of the property sector amid challenging circumstances. While the government’s intervention has provided some relief, the long-term sustainability of the market remains uncertain. It is crucial for policymakers to continue monitoring the situation closely and take necessary steps to ensure stability and growth in the real estate market.