November 24, 2022
  • November 24, 2022

New home prices in China stall for the first time since COVID-19

By on October 20, 2021 0


  • Monthly new home prices stalled for the first time since February 2020
  • Annual new home prices rose at the slowest pace in nine months
  • Fewer cities have reported price growth since February 2020

BEIJING, Oct.20 (Reuters) – New home prices in China stagnated for the first time since February 2020 in September, as the cooling in the housing market intensified amid a credit crunch due to a crackdown continues speculative investments.

The average price of new homes in 70 major Chinese cities was unchanged in September month-on-month, compared to a 0.2% growth in August, according to Reuters calculations based on data released Wednesday by the National Bureau of Statistics (NBS).

The data also showed that only 27 cities reported monthly gains, up from 46 in August, the lowest since February 2020 at the height of the COVID-19 outbreak in China.

In September, some cities stepped up their campaigns to drive speculators out of the real estate market. In Xiamen, the southeastern city further tightened property restrictions in addition to existing measures, prohibiting first-time buyers from reselling their properties for five years.

The tighter restrictions, along with tighter rules on borrowing to purchase real estate, weighed on demand in the short term, analysts said.

“The mortgage credit crunch – with home loans down 510 billion yuan ($ 79.8 billion) year-over-year in the third quarter – was the main reason for the overall market freeze,” said Zhang Dawei, chief analyst of the real estate agency Centaline.

Chinese leaders, fearing a lingering real estate bubble could undermine the country’s long-term rise, will likely keep real estate restrictions tight, although analysts say they could relax some tactics if necessary.

Compared with the previous year, new home prices in China rose 3.8% in September, the lowest in nine months, after rising 4.2% in August.

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“Many developers have recently been exposed to a shortage of cash, which has caused buyers to worry about purchasing buildings that are forever unfinished,” Zhang said.

“In the fourth quarter of 2021, the markets in most cities are expected to enter a clear cycle of adjustment.”


The price cuts have hit small towns particularly with persistent population exoduses or uncertain economic prospects, causing local housing stocks to build up.

Luzhou, Sichuan Province, and Dali, Yunnan Province, have seen month-over-month price drops for seven out of nine months so far this year, the largest of 70 major cities. monitored by the statistics office.

Reuters Charts

In Taiyuan, the capital of northern Shanxi Province, new home prices have fallen six out of nine months.

“Many new houses are being built in Taiyuan, and there is a backlog of houses that have not been sold,” said a Taiyuan resident named Hou, 24.

“Previously, right in front of my house, there was work on a lot for almost two years, and there were several work suspensions during this period.”

Even China’s biggest cities are starting to weaken.

New home prices fell for the second month in Guangzhou, while Tianjin and Chengdu experienced their first monthly decline this year in September. Prices in Beijing have stagnated.

“If there is no significant easing of mortgages from October, price wars will be the main buzzword in the real estate market in the fourth quarter,” Zhang said.

($ 1 = 6.3918 Chinese yuan)

Reporting by Liangping Gao and Ryan Woo; Additional reporting by the Beijing Newsroom; Editing by Sam Holmes and Christopher Cushing

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