China’s home price declines eased for a second month last month, offering a rare glimmer of hope to the embattled property sector.
New home prices in 70 cities, excluding state-subsidized housing, fell 0.04 percent last month from December, when they dropped 0.28 percent, Chinese National Bureau of Statistics figures showed yesterday.
Prices in large cities rose.
Sentiment in China’s home market has been dented by a worsening liquidity crisis among real-estate developers following a regulatory clampdown on excessive leverage.
Shares of Chinese developers slumped yesterday after Zhenro Properties Group Ltd (正榮地產) said that it might not meet its obligations, another negative surprise only weeks after it announced plans to redeem a perpetual bond.
Chinese authorities have been tweaking some of their tightening measures to arrest the property slowdown, which has been hurting growth in the world’s second-largest economy.
Banks in several Chinese cities have cut mortgage down payments for some homebuyers, local media reported last week, in a move that might boost flagging housing demand.
“The dataset is a small positive signal that the quarter-long credit easing in the property sector has curbed an abrupt slowdown,” said Yan Yuejin (嚴躍進), research director at E-house China Research and Development Institute (易居研究院). “If the credit loosening continues, we can pin hopes on a more evident warm-up in the second quarter.”
Home prices have begun to pick up across national hubs and regional economic centers. The four largest cities saw prices climb 0.65 percent on average last month, the biggest increase since June last year. Values gained 0.06 percent in so-called tier-2 cities following three months of declines.
Still, values in tier-3 cities slipped 0.21 percent, the fifth consecutive monthly drop. Prices across the nation in the secondary market declined 0.28 percent, down for a sixth month.
Even with home values showing signs of stabilizing, a slump in sales is continuing to add pressure on builders’ cash flows.
The top 100 developers saw sales drop 40 percent last month from a year earlier, preliminary data from China Real Estate Information Corp (中國房產信息集團) showed.
For many developers, it is unlikely that the crisis will end soon.
China Vanke Co (萬科) chairman Yu Liang (郁亮) urged staff to prepare for a battle that could make or break the firm, the South China Morning Post reported last week.
Global credit rating firms are withdrawing their assessments on property bonds, while a string of auditor resignations is adding to doubts over financial transparency weeks before earnings season.
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