Property nadir in sight; bigger families expected

New home prices in major Chinese cities continued to ease in October with more cities seeing negative month-on-month growth, but industry experts hold the view that the market is about to bottom out and stage a recovery curve, considering recent macroeconomic policies.

Compared to September, more Chinese cities saw new home prices edge down in October, while in terms of year-on-year comparisons, first-tier cities reported growth versus a bigger drop in second and third-tier cities, said Sheng Guoqing, chief statistician with the National Bureau of Statistics urban division.

In October, 58 out of the 70 cities polled saw new home prices drop month-on-month, four more than the month prior, and the number of cities reporting year-on-year price drops stood at 51, one more than in September, said the National Bureau of Statistics on Wednesday.

The four top-tier cities registered a 2.6 percent year-on-year growth in new home prices, but slid 0.1 percent from a month earlier, according to the NBS.

The 31 second-tier cities tracked by the NBS reported a decline of 0.3 percent month-on-month on average in new home prices in October, and a decrease of 1.3 percent from a year earlier.

In 35 third-tier cities, new home prices slipped 0.4 percent month-on-month and 3.9 percent annually.

The COVID-19 outbreaks' negative impact on the property market recovery is being felt, but previously introduced supportive measures have been of some help, said Chen Xiao, a senior analyst with the Zhuge Real Estate Data Research Center.

There is some encouraging news for the property sector. The People's Bank of China — the country's central bank — and the China Banking and Insurance Regulatory Commission have made moves to strengthen collaboration and safeguard the healthy development of the stock, bond and property markets in order to better satisfy people's living requirements, Chen said.

During the seven days between Nov 8 and 14, a series of supportive policies were reportedly introduced, notably 16 measures co-released by the PBOC and the CBIRC on Friday, which indicated more financial support would be provided to the real estate sector to assist its stable and healthy development, Securities Daily reported.

The PBOC and the CBIRC did not confirm this information.

"Based on the unprecedented intensity of the supportive policies, we maintain our forecast that property market recovery will advance at an accelerated speed, the market will welcome a bottoming out and price declines will be narrowed," Chen said.

Likewise, a rising number of cities experienced price declines for pre-owned homes, showing that an adjustment is also underway in the secondary market, said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.

In 62 cities, existing home prices declined month-on-month in October, one more than the previous month. And 64 cities recorded a slide in prices year-on-year, one more than that of a month earlier.

Regardless of the impact of COVID-19 and market adjustments, there is still ample room for a rise in urban housing floor area per capita for would-be homeowners, as the property market has shifted into a new phase allowing people to lead a better life, said Wang Yongqun, chief operating officer of real estate broker Lianjia.

In the meantime, expanding family sizes will also bring about extra living-space demand, and China's continued urbanization will support new housing demand in cities, Wang said.

Since the beginning of the year, related government divisions and local governments have firmly upheld the principle of "houses are for living in, not for speculation", actively launched measures in accordance with local conditions, supported rational housing demand and ensured the delivery of presold property projects, said Fu Linghui, NBS spokesperson and director-general of the Department of Comprehensive Statistics at the NBS, during a State Council Information Office news conference on Tuesday.