Prices of New Homes in China Rise

BEIJING (Reuters) – Prices of new homes in China rose at a faster pace in October, traditionally a peak season for house hunting, a private survey showed on Friday. This suggests recent support measures could be having some early impact in a crisis-hit market.

According to data released by property researcher China Index Academy, the average price across 100 cities edged up 0.29%, compared with the previous month's 0.14%.

On a year-on-year basis, the average price rose 2.08% versus 1.85% growth in September.

The property market, once accounting for roughly a quarter of economic activity, has been grappling with a prolonged downturn since 2021 and remains a significant drag on the world's second-largest economy.

At the end of September, authorities rolled out a raft of property easing measures, including a cut in the minimum down payment ratio to 15% for all housing categories and relaxation in home purchase restrictions.

These stimulus measures appear to have given a lift to the industry in some major cities. The survey indicated that mega city Shanghai recorded the largest month-on-month house price increase at 1.09%.

However, small cities continue to languish, underscoring cautious buyer sentiment that has chilled the real estate market in recent years. According to the China Index Academy data, average new home prices fell 0.02% from a month earlier in smaller cities last month.

New homes sold by value fell 34.7% year-on-year in January-October, though they rose 10.53% in October, according to a separate survey released by the academy a day earlier.

Economists at Nomura noted:
> "The surge in top-tier cities may merely be the result of pent-up demand in response to those easing measures. Such demand is unlikely to be sustainable, as evidenced by cases of short-lived recoveries over the past two years."
> "Ensuring the delivery of pre-sold homes is key to reversing the property slump, especially in low-tier cities… direct funding support from Beijing will be much more effective."