Policy measures to stabilize housing despite dull June

2023-07-18 08:15:11China Daily Editor : Li Yan ECNS App Download

Potential homebuyers look at a property model in Beijing. (JIANG QIMING/CHINA NEWS SERVICE)

China's housing market will continue to stabilize on the back of strong industry fundamentals and policy optimizations although June data showed prices of new homes in major Chinese cities either stayed flat or fell, while those of pre-owned homes fell month-on-month, industry experts and officials said on Monday.

On Friday, Zou Lan, head of the monetary policy department at the People's Bank of China, the country's central bank, said at a news conference organized by the State Council Information Office that given the recent changes in supply and demand, there might still be some room, even if marginal, for optimizing the housing policies that were launched earlier to cool the overheated market.

The finance departments across the country, Zou said, will actively coordinate with related government divisions to strengthen policy research, improve policy accuracy in accordance with various cities' local conditions, better support inelastic demand as well as demand for upgraded housing, and promote the stable and healthy development of the real estate market.

Trading in homes contracted amid weak investment in June, leading to calls for more supportive measures.

Li Yujia, chief researcher at the Guangdong Planning Institute's residential market policy research center, said: "The support, however, should be neither a huge capital injection nor strong stimulus. Instead, the supportive measures should target rational demand and prime property developers, and the high-quality development of the sector."

In June, 31 out of the 70 Chinese cities tracked by the National Bureau of Statistics reported month-on-month growth in new home prices. In May, 46 cities reported such growth.

Similarly, 27 cities reported year-on-year growth in home prices, up from 26 in May, said Sheng Guoqing, chief statistician of the NBS' urban division, on Saturday.

Last month, new home prices in 70 cities fell 0.1 percent from May on average. That marked the first such fall this year, Li said.

Since March, new home prices have been rising, both month-on-month and year-on-year, but at a slower pace, Li said.

New home prices in China's four top-tier cities grew 1.3 percent year-on-year but were flat month-on-month, NBS data showed.

The 31 second-tier cities reported their new home prices were unchanged month-on-month on average in June, but grew 0.5 percent year-on-year.

New home prices in 35 third-tier cities edged down 0.1 percent month-on-month and dropped by 1.4 percent year-on-year.

Liu Lijie, a market analyst from the Beike Research Institute, said the current downtrend in home prices appears temporary, as it is mainly caused by the wait-and-watch sentiment in the market even though supply is sufficient. So, prices will likely gradually stabilize and rise again after a certain period.

"There is no basis for home prices to drop drastically in China. As urbanization continues, the strong demand for better living will likely spur market recovery," Liu said.

In the pre-owned homes market, fewer cities reported price growth. Seven cities saw their existing home prices rise month-on-month in June, down from 15 in May. Prices rose year-on-year in six cities, down from nine in May.

"The pre-owned homes market is under more pressure than the new homes market, especially in the top-tier cities," said Chen Xiao, a senior analyst with the Zhuge Real Estate Data Research Center.

Prices of pre-owned homes in the four top-tier cities — Beijing, Shanghai, and Guangzhou and Shenzhen in Guangdong province — slid 0.7 percent from May and 0.4 percent year-on-year.

In the 31 second-tier cities, the corresponding falls were 0.4 percent and 2.4 percent, respectively. Similarly, in the 35 third-tier cities, the falls were 0.4 percent and 3.4 percent, respectively.

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