China's new home prices extend decline despite improvement in major cities

BEIJING — China's new home prices extended their decline in March, official data showed on Thursday (April 16), although major cities showed some month-on-month improvement.

Weak demand continued to weigh on the property market.

According to Reuters calculations based on data released by the National Bureau of Statistics, new home prices fell 0.2 per cent in March from the previous month, compared with a 0.3 per cent decline in February.

On an annual basis, prices dropped 3.4 per cent, deeper than February's 3.2 per cent fall and the sharpest decline in 10 months.

The persistent weakness in new home prices suggests the troubles facing China's distressed property developers are far from over, even as top leaders repeatedly pledge to arrest a multi-year slide in the sector and stabilise it.

Government-backed China Vanke posted a net loss of about 88.6 billion yuan (S$16.5 billion) for 2025 and is seeking to extend an onshore bond maturing this month after extending three other bonds earlier this year.

Separate official data showed first-quarter property investment and sales recording double-digit declines.

Still, attention is turning to month-on-month gains in both new home and resold home prices in tier-one cities. In Shanghai, new home prices rose 0.3 per cent, up from 0.2 per cent in February, while existing home prices increased 0.4 per cent, compared with a 0.2 per cent gain the previous month.

The improvement could offer some relief to China's distressed property developers. They have been in the red since the real estate industry fell into a slump around mid-2021 as sales dove and borrowing became more difficult.

"China's property market has not yet bottomed out, though it appears to be getting closer," said Larry Hu, chief China economist at Macquarie. "One possible sign that it has would be a clear and significant policy shift. At that point, I believe the housing market would reach its bottom."

"But when might such a major policy turn occur? In my view, it would come when China's exports start to crash, as that is when property policy would likely undergo a much more substantial shift," Hu said, adding that he does not expect much change in property policy in the near term given that first-quarter exports were still strong.

Chinese policymakers have rolled out several rounds of support measures in an effort to revive the property sector, which was once a key driver of economic growth. They have also called for city-specific policies to curb new housing supply, reduce inventory and improve the balance of market supply and demand.

In the past few months, localities across China — from megacity Shanghai to third-tier cities like Wuxi and Yichang — offered incentives for people to purchase homes. Shanghai further relaxed buying curbs, while Wuxi and Yichang promised subsidies for certain buyers.

Goldman Sachs said in a research note last week that more tier-one and tier-two cities were likely to achieve home price stabilisation over the next one to two years, with Shenzhen and Shanghai leading the way.

But it said there was no quick fix for lower-tier housing markets, citing elevated inventories, population outflows and weak fiscal fundamentals.

[[nid:729038]]