BEIJING (Reuters) – China’s new home prices rose for the fourth straight month in April but at a slower pace, heightening fears that pent-up demand after the country’s economic reopening is fading.
Economists say more policy stimulus may be needed to ensure the recovery stays on track after a batch of recent data showed imports contracted sharply, factory gate prices fell again and industrial output and retail sales missed forecasts.
New home prices in April rose 0.4% month-on-month versus a 0.5% gain in March, according to Reuters calculations based on National Bureau of Statistics (NBS) data on Wednesday.
The slower pace of home price gains, along with bearish data on Tuesday showing property investment and sales sharply falling, are raising doubts about the strength of the recovery in a sector crucial to the health of China’s economy.
Beijing’s aggressive stimulus policies to the crisis-hit property sector since November have boosted sentiment over the past few months but homebuyers are increasingly worried about job security.
Zhang Dawei, analyst at property company Centaline, said the fundamentals of the market have not changed and homebuyers are starting to hold back following the release of pent-up demand in the first quarter that pushed prices up.
From a year earlier, prices fell 0.2%, the 12th month of decline in annual terms. Prices were down 0.8% in March.
Fewer cities reported home price gains in monthly terms in April. Home prices in tier-two and three cities also rose at a slower pace in April.
April money and credit data last week suggested growth of households’ medium-to-long term loans, mostly mortgages, decelerated in April, in line with slower property transactions.
“(We) maintain our view that the property sector recovery should be gradual and bumpy due to the challenging demographic trend, still-tight financing conditions for troubled developers and policymakers’ long-held stance that ‘housing is for living in, not for speculation’,” said analysts at Goldman Sachs in a research note.
As part of a broader push for the economy to emerge from the pandemic, an increasing number of Chinese cities have introduced support measures or relaxed rules for first-time homebuyers.
Analysts expect stimulus, however, to be measured.
“We see limited scope for big housing policy stimulus given that mortgage rates and down-payment ratios in many cities are already at record low or multi-year low levels,” analysts at Barclays said in a research note.
Last week, China’s housing regulator issued a notice that requires local real estate brokers to reduce fees for housing transactions and leasing services to promote healthy development of the sector.
($1 = 6.9121 Chinese yuan)
(Reporting by Liangping Gao, Qiaoyi Li and Ryan Woo; Editing by Jacqueline Wong)
