China’s New Home Prices Rise for Ninth Consecutive Month in May

According to data from the China Index Academy, a real estate research organization, new home prices in China rose modestly for the ninth consecutive month in May, with a 0.25% increase compared to April’s 0.27% gain.

Government Support Measures on New Home Prices:

The steady rise in prices is attributed to a series of supportive measures implemented by the government to stabilize the crisis-hit property sector.

These measures include easing mortgage rules, injecting 1 trillion yuan ($140 billion) in extra funding, and requiring local governments to commit to purchasing apartments.

Sector Challenges

China’s property sector, a crucial component of the economy, has been in turmoil since 2021 due to a regulatory crackdown on high leverage among developers, which triggered a liquidity crisis. The government’s recent interventions aim to boost home sales and increase liquidity.

Impact of Policy Changes on New Home Prices:

The recent policy changes have led to increased visits to core city projects, though a significant pickup in transactions is still pending.

According to the China Index Academy, while the new policies have stimulated interest, a full market recovery will depend on improvements in residents’ income expectations.

Investor Sentiment:

Investors view the government’s “historic” measures in mid-May as a positive sign of more decisive intervention to bolster homebuyer demand and stabilize prices.

However, the long-term impact on the market remains contingent on broader economic factors and consumer confidence.