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China home prices
Business

China’s April new home price index falls for the first time in seven years as Covid-19 adds to the slumping property market’s cash woes

  • The index of home prices in 70 of China’s benchmark cities fell 0.1 per cent in April from a year ago, the first monthly decline since a 0.4 per cent drop in November 2015
  • Prices of lived-in homes fell 0.3 per cent, dropping for the eighth straight month

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A housing complex by the Chinese property developer China Evergrande Group in Guangzhou, on September 17, 2021. Photo: AFP
Lam Ka-sing

China’s home prices fell across the board last month, with newly completed abodes marking their first monthly decline in almost seven years, as a resurgent Covid-19 outbreak in several major cities exacerbated the slumping property market.

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The index of home prices in 70 of China’s benchmark cities fell 0.1 per cent in April from a year ago, the first monthly decline since a 0.4 per cent drop in November 2015, according to the National Bureau of Statistics. Prices of lived-in homes fell 0.3 per cent in April, compared with March, dropping for the eighth straight month.

“The signal is very meaningful,” said Yan Yuejin, research director at Shanghai-based E-house China Research and Development Institute. “The turning point in housing prices fully shows that the real estate market is facing downward pressure.”

Shenzhen, the technopolis in southern China and the home base of such technology giants as DJI, Huawei Technologies and Tencent Holdings, was the worst performer among first-tier cities as transactions were dented by a weeklong partial lockdown in late March to snuff out a Covid-19 outbreak. Prices fell 0.1 per cent last month, reversing the 0.8 per cent increase in March.
Shenzhen residents ordered to undergo tests for the COVID-19 disease on March 15, 2022. Photo: AP
Shenzhen residents ordered to undergo tests for the COVID-19 disease on March 15, 2022. Photo: AP

Prices remained unchanged in Shanghai, locked down since April 1, compared with the 0.3 per cent gain a month earlier in China’s commercial hub.

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Declining prices and contracting transactions underscore why China’s banking regulator and banks are cutting their mortgage rates in cities like Tianjin to revive the stagnating property market and the broader economy. A record number of edicts, administrative measures and policies had been issued since January to relax and reverse the clampdown on prices that had been in place since 2017, according to Centaline Property Agency.

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