BEIJING (Reuters) – China’s new home prices rose at a slightly faster pace in April, adding to signs of gradual recovery in the property market as the government eases virus-busting restrictions on movement and re-opens the world’s second-largest economy.
Average new home prices in 70 major cities rose 0.5% in April from the prior month, a pace not seen since October, and following a 0.1% increase in March, Reuters calculated based on data from the National Bureau of Statistics (NBS).
On an annual basis, home prices picked up 5.1% in April, compared with 5.3% in March.
“Pent-up housing demand is being further released in April as the economy and life continue to get back on track,” an NBS official said in a statement accompanying the data.
As China has largely stemmed the spread of the virus, sales are recovering quickly as authorities let developers reopen showrooms and property agents conduct viewings. Market sentiment has also been underpinned by easier access to mortgages and lower interest rates as the government increases liquidity to rekindle economic activity.
Average mortgage interest rates in 41 cities for first- and second-home purchases declined in April from March, as banks followed the central bank’s cut in its key lending rate.
The stronger home prices are in line with signs of recovery for real estate developers, which in April saw quickened investment and a narrower decline in sales.
While the government has so far refrained from substantial easing in property policies, local authorities have relaxed purchase restrictions or introduced measures to help soothe developers’ financial strain.
One such measure is the recent “hukou” reform, which loosens residency rules to make it easier for people in rural areas to move to small cities, to boost urban consumption and expand the pool of home buyers.
Zhang Dawei, a Beijing-based analyst with property agency Centaline, estimates the property market in April recovered as much as 80% to 90% of its pre-virus level, with some areas even outperforming.
Most of the 70 cities surveyed by the NBS reported monthly price increases for new homes, with the number rising to 50 from 38 in March.
Robust gains were recorded across all city tiers. The top performers were Nanjing, the capital city of eastern Jiangsu province, and Tangshan, in the northern Hebei province, with both notching up monthly price increases of 1.8%.
Prices were lower in Wuhan city，the epicentre of the coronavirus outbreak, NBS data showed.
BUYERS STILL CAUTIOUS
Though the land market and property transactions in some cities have built momentum, analysts said a broader recovery in home prices seems unlikely while mortgage and purchase restrictions remain.
The government has reiterated its strict stance against hot money flows into the property market, even as the economy emerges from its first contraction since at least 1992.
A UBS China housing survey conducted last month showed a significant weakening of market sentiment and home purchase intention, with respondents’ citing the outlook for virus-hit income as well as market confidence.
A record-low 22% of respondents expected housing prices to increase in the next 12 months, the survey showed.
China’s economy is slowly emerging from its coronavirus lockdown, but consumption remains depressed amid job losses and concern about the risk of second wave of infection.
Legislators are widely expected to announce fresh economic stimulus measures to spur domestic demand at China’s annual parliamentary meeting which begins on Friday.
“The government will not change its tone of ‘houses are not for speculation’, so property policy is unlikely to be relaxed on the demand side,” said analysts with Sinolink Securities.
“We expect property policy to focus more on the supply side, such as increasing land supply to tame prices in some cities where housing prices are rising too fast.”
(Reporting by Lusha Zhang, Roxanne Liu and Se Young Lee; Editing by Kim Coghill and Christopher Cushing)