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China New Home Prices Fall at Slower Pace on Promotions, Easing

China’s housing slump moderated a fraction in December as property developers rolled out promotions and financing conditions eased.

Some of China's state banks and asset managers are refusing to rescue distressed property companies because of the debts they will incur, sources say.
A housing complex built by Chinese property developer Evergrande in Huaian in China's eastern Jiangsu province.


China’s new home prices fell more slowly in December than a month earlier as promotions by property developers and a marginal easing on financing conditions helped stabilise demand.

Average new home prices in China’s 70 major cities declined 0.2% in December from a month earlier, slower than a 0.3% drop in November, according to calculations by Reuters based on data released by the National Bureau of Statistics (NBS) on Saturday.

China’s property market has slowed since June 2021 as regulators stepped up their deleveraging campaign against the overbuilt sector, triggering defaults at some heavily indebted companies.

But the decline moderated as authorities and property developers in multiple cities introduced measures in December to boost home sales, with local governments providing subsidies for buyers and real estate firms offering discounts.

Monthly prices picked up in 15 of 70 cities, up from nine cities that reported price gains in November.


Bottoming Out?

“The property market is gradually bottoming out with the period of tightest credit over,” said Zhang Dawei, chief analyst at property agency Centaline. First- and second-tier cities will be the first to emerge from the downturn, he said.

New home prices rose 2.6% year-on-year in December, slower than the 3.0% growth recorded in November.

In a recent note, Oxford Economics analysts said they expect central and local authorities to take steps to contain risks from defaults by property developers, such as increasing credit to the sector and tweaking the strict “three red lines” policy introduced to curb borrowing by developers.

A payment extension granted by bondholders to beleaguered developer China Evergrande Group came as authorities increasingly emphasise the need to maintain economic stability.

Yan Yuejin, research director of Shanghai-based E-house China Research and Development Institute said he expects property policies to continue to ease in the first quarter given the large economic impact of the real estate market.

“The December data is a positive sign, pointing to home prices not falling further.”


  • Reuters with additional editing by Kevin Hamlin


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Kevin Hamlin

Kevin Hamlin is a financial journalist with extensive experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.


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