The majority of China’s 70 large and medium-sized cities had a month-over-month decline in home prices in December, but thanks to newly implemented supportive policies, the housing market is anticipated to gradually rebound.
Compared to 51 in November, new home prices decreased month over month in 55 of the 70 cities in December. Chief statistician with the urban division of the National Bureau of Statistics, new housing prices in first-tier cities stayed unchanged month over month after declining by 0.2 percent in November.
Major cities are projected to take the lead in market stabilization after the second quarter of 2023 when the real estate market in China is predicted to reach its bottom.
This year, the overall housing finance policy will continue to improve in order to increase home demand. Commercial banks will quicken home loan extensions as mortgage rates are anticipated to stay at a record low.
While the fall in land prices may slow down, home prices in some of the most active real estate areas are projected to stabilize and increase in the second quarter. Real estate investment will pick up later.
In an effort to boost the real economy, China has announced a number of policies to support the real estate industry. As part of measures to reduce financial risks in the real estate sector, the financial regulators recently developed and recommended a plan to strengthen the balance sheets of reputable property developers who are experiencing liquidity concerns.
The initiative intends to increase the cash flows of reputable real estate developers and direct their balance sheets to stabilize. To stabilize the real estate sector’s activities, the PBOC, the central bank, is considering implementing a number of structural monetary policy instruments.
Quality property developers will be revived as the consequences of policies on both the supply and demand sides of the real estate market are released continuously.
The industry is projected to participate in a wave of mergers and restructuring initiatives, significantly reducing sector risks. Additionally, housing finance will continue to improve, which will encourage a minor decrease in the price of buying a property.