China’s March new home prices stagnate again as COVID dampens sentiment

A worker walks on scaffolding at a construction site in Shanghai, China January 14, 2022. REUTERS/Aly Song

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  • New home prices unchanged month-over-month in March
  • Stable price growth in one month for the second consecutive time
  • New home prices rose at slowest pace in six years

BEIJING, April 15 (Reuters) – China’s new home price growth was flat again in March from a month earlier, government data showed on Friday, indicating fragile demand amid growing COVID lockdown measures -19 undermined consumer confidence.

Average new home prices in 70 major cities were unchanged month on month for the second consecutive time, according to Reuters calculations based on March data from the National Bureau of Statistics (NBS).

On an annual basis, new home prices rose 1.5%, the slowest pace since November 2015, and slowing from a 2.0% gain in February.

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More than 60 cities have eased restrictions on home purchases to support the struggling real estate market, after a government campaign to reduce high developer debt levels sent the sector into a deep cooling in the second half of 2021 .

Banks in more than 100 Chinese cities have lowered mortgage rates by about 20 to 60 basis points since March, central bank official Zou Lan said Thursday.

But after signs of improvement in January, a rise in cases of the highly transmissible variant of Omicron and strict virus lockdown measures dampened demand again in many cities.

In Tier 1 cities, prices rose 0.4% on the month, compared to a 0.5% rise in February, while growth in Tier 2 cities was flat.

“The slowdown in growth in first-tier cities in March was mainly due to the impact of the COVID pandemic, indicating lower market expectations,” said analyst Xu Xiaole of Beike Research Institute.

More cities are likely to ease housing restrictions in the near future, and demand will be gradually released, Xu said.

The real estate market in Shanghai’s commercial center slowed, with house prices rising at the slowest pace in four months, at 0.3% month-on-month.

Shanghai is in the midst of China’s worst outbreak since the virus emerged in Wuhan in late 2019, reporting more than 20,000 cases a day amid an unprecedented citywide lockdown. Dozens of other cities are in partial or total containment.

Price growth in Shanghai does not reflect the overall market situation, said analyst Lu Wenxi of real estate agency Centaline.

“Shanghai’s new house price growth will ease further in April,” Lu added.

In March, transactions in value of newly built homes in Shanghai fell 27% from the previous month to 36.2 billion yuan ($5.68 billion), financial magazine Yicai said.

China’s State Council, or cabinet, said Wednesday that more policy measures were needed to support the economy, but analysts are unsure whether interest rate cuts would quickly reverse the crisis as long as the government maintains its zero tolerance policy against COVID-19.

In the first 12 days of April, new home sales by volume in 30 cities studied by Wind were down 55.6% year-over-year, Nomura analysts said in a client note on Wednesday. .

($1 = 6.3739 Chinese yuan renminbi)

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Reporting by Liangping Gao and Ryan Woo; Editing by Muralikumar Anantharaman and Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.

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