The average price of new homes in 100 cities across China increased by 0.30 percent in May, indicating that supportive government policies may be starting to have a positive impact on the real estate market. This rise is significantly higher than the previous month’s increase of 0.14 percent. The upturn in new home prices comes as Chinese policymakers implement various measures aimed at stabilizing the sector, including recent reductions in lending rates to encourage real estate purchases.
According to a report by the China Index Academy, current macroeconomic policies have been increasingly supportive of the property market. Notably, new home prices in both first- and second-tier cities have shown growth, with Shanghai leading the charge among the 100 cities surveyed.
On a year-over-year basis, prices for new homes saw a quicker rise of 2.56 percent compared to 2.50 percent in April. However, the segment for second-hand homes continues to struggle, with prices falling by 0.71 percent month-on-month and 7.24 percent year-on-year, reflecting a surplus of listings that places downward pressure on prices.
The property market plays a crucial role in the Chinese economy, contributing about 25 percent to economic activity and housing approximately 70 percent of household wealth. Signs of stabilization in home prices could provide much-needed relief for China’s economy amid ongoing challenges, such as an unresolved trade war with the United States.
This news reflects a potential positive shift in China’s property market, presenting an opportunity for economic recovery and growth. As the country adapts to its challenges, these developments could pave the way for increased consumer confidence and investment in the real estate sector.