China’s modest housing recovery continues in November
BEIJING: China’s home prices rose for the second straight month in November in on-year terms, signaling further stabilization in the country’s largest urban housing markets, although oversupply continues to plague smaller cities.
Average new home prices rose 0.9 percent in November from a year earlier, Reuters calculated from the National Bureau of Statistics (NBS) data released on Friday, continuing October’s 0.1 percent rise.
The two months of on-year increases follow 13 consecutive months of declines, providing tentative signs of an improving property market and easing fears of a sharper slowdown in the broad economy, which is heading for its weakest growth in 25 years this year.
Analysts say the mild recovery is likely to continue in 2016 with the government expected to unveil more measures to reduce high inventories in small-and medium-sized cities.
“Top policymakers have made it clear that the next step will be focused on destocking in the housing market. We think the policy stance will be more supportive,” said Xia Dan, property analyst at Bank of Communications in Shanghai.
Most of China’s unsold homes are in third and fourth tier cities, which have been hit by emigration to larger centers and where cash strapped local governments rely on land revenues as their main income. Some analysts estimate it could take at least two years to clear the glut.
Chinese leaders said at Monday’s Politburo meeting that the government will take more steps next year to tackle property inventories, including helping migrant workers to buy homes in cities.
The NBS data showed previous government policies continued to gain traction, with on-month price rises seen in 33 of 70 major cities tracked by the NBS, up from 27 in October.
Following a year-long slump, China’s home sales and prices have increased in bigger cities over recent months, helped by a barrage of government measures, including reduced downpayments for home buyers and scrapping home purchase restrictions.
A Reuters poll shows China’s home prices are expected to rise 2.0 percent in 2016 from a year before, with the government likely to unveil more measures to support the struggling sector.
Analysts expect local governments will roll out more detailed stimulus measures, including financial and interest subsidies, tax reduction and downpayment cuts, to encourage rural residents to buy homes in small cities.
Already, local authorities in central Henan Province vowed to allocate at least 300 million yuan ($46.29 million) annually to encourage farmers to buy first home by cutting transaction fees, the official Xinhua news service reported last month.
China’s central bank said in a working paper on Wednesday that it would take more than three quarters for improved sales to be felt in property investment, with stabilization likely in the second half of 2016.