China Home Price Growth Accelerates as Credit Makes Comeback

(Bloomberg) --

New-home price growth in China snapped a four-month weakening streak, one of the first official signs there may be a widespread recovery in the nation’s housing market.

• The value of new homes, excluding government-subsidized housing, gained 0.61 percent on average in March from February in 70 major cities tracked by the nation’s statistics bureau, official data released Tuesday showed. That accelerated from a 0.53 percent rise a month earlier.

Key Insights

• The recovery is more evident in Tier 2 and Tier 3 cities, where local governments have increasingly sought to use so-called stealth easing to offset reduced support from shanty-town renovation projects

• The biggest gains came in Dandong and Jinzhou, cities with populations of about 3 million. Smaller cities generally enjoy looser property policies, and buyers could flock back into the market once they sense demand is rebounding in bigger towns, said Yan Yuejin, an analyst at China Real Estate Information Corp.

• Home-sales data to be released Wednesday will give a clearer picture of whether buyer sentiment has improved. Early signs of green shoots were evident in developers’ sales last month
• The rebound in price growth also puts a question mark over whether there will be more loosening of property curbs. Credit growth rose strongly in March, and that’s seeped through to the real estate industry. Beijing also recently directed dozens of smaller cities to scrap rules on local residency permits in a timely boost for housing markets in those towns
• With credit flowing again, “some buyers are afraid of missing another price jump,” said Zhang Dawei, an analyst at Centaline Group. “After sitting on the sidelines for a long while, their pent-up demand could push prices higher.”

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• For more detail on the data, click here

To contact Bloomberg News staff for this story: Emma Dong in Shanghai at edong10@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Peter Vercoe

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