Post-Virus Rebound in China’s Housing Market May Be Short Lived

China’s property market, which was battered by the coronavirus epidemic in the first quarter, is showing signs of recovery, with government data pointing to a pickup in demand and rising prices in many areas across the country.To get more news about China property market news, you can visit shine news official website.

The improvement may give some comfort to China’s leaders and policymakers who will be gathering in Beijing later this week for the annual meeting of the National People’s Congress, the country’s legislature, which was delayed from its traditional March fixture because of the Covid-19 outbreak. The government is expected to announce its main targets for the year, including economic growth and the budget deficit, along with details of policies including reform of the household registration system which could give further support to the property market.

A monthly survey (link in Chinese) of 70 large and medium-sized cities showed that in April, prices of new homes increased on a month-on-month basis in 50 towns, the highest number since September 2019, while the cost of second-hand housing rose in 37 cities, up from 32 in March. The report, released by the National Bureau of Statistics (NBS) on Monday, showed the average price of a newly built dwelling in 31 second-tier cities rose 0.5% month-on-month, up from a 0.3% increase in March, while in 35 third-tier cities, new-home prices gained 0.6%, up from an 0.2% increase in March.

“As the situation of Covid-19 epidemic prevention and control in China has improved, economic and social order has been further restored, and pent-up demand for housing which was suppressed by the epidemic has been further released,” NBS statistician Kong Peng said in a statement (link in Chinese). Large swaths of the economy shut down from late January to early March amid government efforts to prevent the spread of the coronavirus, and property sales and land auctions were halted. Monday’s report adds to evidence that the property sector, a key pillar of China’s economy, is recovering as the economy has reopened and business activities are gradually returning to their normal level. The survey of 70 cities doesn’t give details of transactions but data (link in Chinese) from the NBS on Friday showed that sales of newly built housing, new housing starts and land purchases by developers are slowly picking up.

The decline in the total floor area of residential housing sold across the country in the first four months of 2020 narrowed to 18.7% from a 25.9% decline in the first quarter, Friday’s data report showed. The NBS only provides cumulative data but the slower pace of decline suggests that in April residential sales fell just 1.5% year-on-year, compared with a 13.9% decline in March, according to Caixin calculations based on NBS data. The decline in investment in residential housing development also moderated to 2.8% year-on-year in the first four months from a 7.2% drop in the January-to-March period, while the amount of money developers spent buying land-use rights from local governments jumped by 6.9% after an 18.1% drop in the first quarter. China’s gross domestic product (GDP) shrank 6.8% year-on-year in the first three months of 2020, the first quarterly contraction since the data series began in 1992.

The government had up until then resisted calls to relax its long-standing controls on the housing market aimed at preventing a surge in prices that could lead to a property bubble. Many analysts expected the government would relent after the dismal first-quarter data, but it has shown no signs of changing its position. Cities that have tried to roll back controls in order to stimulate their local economies have been forced to backtrack. In the latest example, Jingzhou, a city in Hubei province, the epicenter of the Covid-19 outbreak, withdrew (link in Chinese) a package of support measures for the property market in April just days after releasing them, saying they did not conform with the provincial authorities’ policies. “Local governments continued to resolutely implement the decisions and arrangements of the Central Committee of the Communist Party of China and the State Council, whose positions are that houses are for living in not for speculation,” Kong said in Monday’s statement.