China’s home price rebound extends into March after unprecedented relief measures

“We expect more housing easing in the months ahead, but 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,” Goldman Sachs said in a report on Saturday.

The central city of Wuhan led the price gains in March. New-home prices in the capital of Hubei province recorded a 1.3 per cent month-on-month gain, the most among the 70 cities. Such prices in Beijing and Shanghai rose 0.3 per cent and 0.4 per cent respectively, according to the statistics bureau.

The improvement in the housing data was in tandem with a monthly credit growth report released earlier in the week by the central bank that suggested a continuing pickup in home purchases. Commercial banks advanced a record 634.8 billion yuan (US$92.4 billion) in medium and long-term household loans last month, a proxy for mortgage lending in China.

A broader recovery in the housing market may be on the horizon as Beijing, where the strictest tightening of purchases has been put in place, is joining smaller cities in relaxing restrictions, although at a limited pace. The capital city’s housing authority proposed fine-tuning of policies on a district-by-district basis this week, which is largely interpreted as a move to prop up the property market in outlying Fangshan district that saw home prices tumble 48 per cent last year. Details on the changes are still unknown.

Investors are unimpressed by the extent of the recovery, as a Bloomberg gauge of 33 Chinese property stocks that mostly trade in Hong Kong has dropped more than 8 per cent this year, lagging the performance of the Hang Seng Index.

JPMorgan Chase said in a report this month that year-to-date sales at the top 100 developers were still 30 per cent below the three-year average through 2021, while Chinese brokerage Shenwan Hongyuan said the pickup could simply be the release of one-off pent-up demand after the end of pandemic controls, and that the industry recovery remained uneven with smaller cities lagging.