China's New Home Prices Edge Up in September, Showing Signs of Recovery - Expert Analysis Revealed
In a recent survey conducted by China Index Academy, it was found that new home prices in China saw a slight increase in September, marking a positive trend in the crisis-hit real estate market. This comes as welcome news for both investors and homebuyers alike, as the market has been struggling for months.
The average price across 100 cities rose by 0.14% compared to the previous month, and by 1.85% compared to the same time last year. While only 17 cities reported price gains, down from 35 in August, the overall sentiment remains cautious due to the lingering effects of the market downturn.
The real estate market in China has been in a slump since 2021, with many developers defaulting on loans and leaving behind unsold homes and unfinished projects. Despite efforts by authorities to stimulate demand by lifting restrictions and lowering mortgage rates, the impact has been limited.
In a recent move to boost buying activity, the central bank announced a monetary stimulus package that includes a reduction in the minimum down payment ratio to 15% for all housing categories. Top-tier cities like Guangzhou, Shanghai, and Shenzhen have also relaxed home purchase restrictions in an effort to encourage buying.
However, experts like economist Huang Zichun from Capital Economics believe that these measures may not be enough to turn the market around. According to Zichun, providing greater fiscal funding for the purchase of unsold homes could make a real difference.
The prolonged market downturn has not only affected investors but also households who rely on their homes as their largest investment. To ease the burden on homeowners struggling to pay loans, regulators have instructed banks to lower interest rates on existing mortgages by the end of October.
In conclusion, the slight increase in new home prices in China is a positive sign for the market, but the overall sentiment remains cautious. Investors and homebuyers should stay informed about the latest developments and be prepared for potential market fluctuations. It is advisable to seek expert advice and consider all factors before making any investment decisions in the current real estate landscape.