China home prices fall at slower pace amid easing measures

Pedestrians cross a road in front of residential buildings in Beijing, China. Home prices fell at a slower pace in March after authorities took further steps to prevent a worsening of a prolonged downturn in the real estate industry. - Bloomberg

CHINA’S home prices fell at a slower pace in March after authorities took further steps to prevent a worsening of a prolonged downturn in the real estate industry.

New home prices in 70 cities, excluding state-subsidised housing, slipped 0.07% last month from February when they dropped 0.13%, National Bureau of Statistics figures showed Friday.

Values in the secondary market declined 0.19%, the slowest pace in six months.

The narrower fall offers a rare glimmer of hope to the embattled property sector, which has been hit by a cash crisis among developers following a clampdown on leverage and more recently the country’s largest Covid-19 outbreak in two years.

The Chinese government has pledged more fiscal and monetary stimulus to boost the economy, including a vow to prevent a “disorderly collapse” in the property market.

“A few larger cities are getting back onto a normal track as pent-up demand is gradually being released,” says Chen Wenjing, associate research director at China Index Holdings.

“However, the market recovery still depends on the control of the Covid outbreak and further property policy support.”

The State Council, China’s cabinet, hinted strongly on Wednesday of a reserve requirement ratio cut, which would free up more cash for lenders.

Still, the central bank left a key policy rate unchanged on Friday, disappointing most economists who had expected a reduction to bolster the economy amid the worsening Covid outbreak.

The People’s Bank of China has been guiding banks to step up lending since early this year and more cities have relaxed home purchase and mortgage rules, as authorities seek to put a floor under growth ahead of a political reshuffle later in the year.

More than 60 municipal authorities loosened housing regulations in the first quarter.

They include four provincial capital cities that abandoned signature restrictions on how many residences households can own and how long they should hold properties before selling them.

Banks in more than 100 cities lowered mortgage rates by 20 to 60 basis points since March, head of the central bank’s financial market department Zou Lan said at a Thursday briefing.

There was a pickup in medium and long-term loans to households in March, which are a proxy for mortgages, though the total was still lower than a year earlier.

The March data doesn’t show the potential impact of an extensive lockdown spreading from the country’s financial hub Shanghai.

Elsewhere, the southern metropolis of Guangzhou is implementing a series of restrictions after local authorities warned that Covid found last week could be the tip of the iceberg.

For example, residents in Guangzhou cannot leave the city unless necessary, and permitted travellers must have a negative nucleic acid test result taken within 48 hours before departure.

A citywide testing campaign is underway, and officials could conduct several rounds of testing before easing restrictions. — Bloomberg