China’s real estate market remained largely anemic in April, but the faint price recovery in top-tier cities offered a sign of improvement in a sector whose fortunes are deemed to be crucial to the economy.
Of 70 large and medium-sized cities surveyed, 48 saw new home prices dip in April from the previous month, down from 50 in March, according to data released by the National Bureau of Statistics (NBS) on May 18.
Year on year, 69 cities reported new home price drops, with Shenzhen being the only outlier, with a 0.7-percent gain.
For existing homes, 34 cities saw price declines in April on a monthly basis, eight reported flat prices, while 28 cities posted gains.
While the market remains broadly on a downward trend, home prices in some first-tier cities are edging up on the back of government support policies.
According to NBS calculations, China’s top-tier cities, including Beijing and Shanghai, saw average home prices up 1 percent on a monthly basis in April, whereas those in second- and third-tied cities declined 0.1 percent and 0.3 percent, respectively.
China’s property market took a downturn in 2014 due to weak demand and a surplus of unsold homes. The cooling has continued into 2015, with both sales and prices falling and investment slowing.
The persistent weakness in the sector, combined with shrinking exports due to uneven global economic recovery, dragged China’s growth to 7 percent in the first quarter, the lowest quarterly rate since 2009.
Repeatedly highlighting downward pressure on the economy, Chinese authorities have taken measures to arrest the slowdown. The central bank has cut the benchmark interest rate three times since November. It has also dropped banks’ reserve requirement ratio twice since February.
In March, China reduced down payment levels for second home buyers to 40 percent from the previous 60 to 70 percent, and exempted business tax for sales of homes purchased over two years ago.
On the back of such policies, home sales in some major cities have picked up, but in less developed areas where inventories remained high, the policy effect seemed muted.
Earlier data from property agent Centaline showed April’s transaction volume of second-hand homes in Beijing reached 17,191, the highest in nearly 25 months.
Bank of Communications forecast that the regional divergence in the market would continue in May. It also expects property investment to further slow as developers are pressured by stockpiles and financing costs.
Investment in China’s property sector rose 6 percent year on year to 2.37 trillion yuan (387.25 billion US dollars) in the first four months of the year. The growth dropped from the 8.5-percent increase seen in the first quarter.