China Home Prices Resume Upward Climb as Virus Impact Abates

(Bloomberg) — Residential home prices in China rose in March as pent-up demand after a period of lockdown during the height of the coronavirus supported sales.

New-home prices in 70 major cities, excluding state-subsidized housing, gained 0.13% in March from February, National Bureau of Statistics data released Thursday showed. Price growth effectively stalled in February because there were hardly any transactions as people stayed at home

Values for second-hand residences, which are free of government intervention, rose 0.05% after a slim decline in February

“Pent-up housing demand is being released gradually as the economy and life start to get back on track,” the bureau’s chief statistician Kong Peng said in a statement along with the data

Key insights

The reading is the first proper insight into China’s virus-hammered home market as authorities gradually lift restrictions and allow residents to get back to work. Last month, prices in about one-quarter of cities monitored by the statistics bureau were deemed unchanged due to a lack of activity.

Sales are recovering quickly as authorities allow developers to reopen showrooms and property agents conduct viewings. New apartment sales tripled in March from February, E-House China Holdings Ltd. data on 27 major cities show.

Whether the slight home-price growth in March is a precursor to a full rebound remains to be seen. State-owned newspapers have reported that the virus won’t change President Xi Jinping’s stance that homes are for living in, not for speculation. There’s also a chance China’s provinces will shut down again should there be a second surge in virus cases. If that happens, the housing-market fallout could be akin to the hit taken during the 2008 global financial crisis, according to S&P Global Ratings.

For now at least, developers are seizing upon the momentum to ramp up sales. The country’s major home builders have achieved better-than-expected online transactions by offering price discounts of between 5% and 10%, according to CGS-CIMB Securities analyst Raymond Cheng.

Looking beyond February’s distortion due to the outbreak, the price growth in March is still weaker than January. In March versus February, the number of cities seeing a slide in values in the new-home market held broadly stable and even increased in the second-hand market.

Prices in two cities in Hubei province, the original epicenter of pandemic, are still considered unchanged, the statistics bureau said.

Contact editor Yang Ge (geyang@caixin.com)