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In April, the number of major Chinese cities experiencing a rise or stability in new home prices increased to 21 from 16 the previous month, based on recent official figures.
In first-tier cities, new home prices edged up by 0.1% compared to March, following a 0.2% increase in March. Specifically, prices in Shanghai went up by 0.4%, Guangzhou and Shenzhen each saw a 0.1% increase, but Beijing experienced a 0.2% decline.
Shanghai stood out as the only first-tier city to report a year-over-year increase in new home prices, climbing by 3.7% in April.
In second-tier cities, new home prices decreased by 0.1% in April relative to March, which is a slower decline compared to the 0.2% drop the month before. Meanwhile, in third-tier cities, prices declined by 0.3% from March to April, consistent with the previous month.
Experts anticipate that major Chinese cities will continue to see their recovery momentum through May.
Second-hand home prices in first-tier cities increased by 0.4% from March. Among these, Beijing experienced a 0.4% rise, Shanghai saw a 0.7% increase, Guangzhou and Shenzhen both grew by 0.2% and 0.3%, respectively.
In second- and third-tier cities, pre-owned home prices fell by 0.2% and 0.3% respectively over the same period.
On an annual basis, overall price declines persisted, though the rate of decline has slowed. First-tier city pre-owned home prices dropped 6.8% in April compared to last year, slightly better than the 7.4% decrease reported in March.
The month-on-month decline in second-hand home prices across 70 key Chinese cities has been narrowing for four consecutive months. Additionally, the year-over-year decrease has shrunk for the first time in eight months, according to a research institute analyst.
The easing of policies, combined with substantive price corrections that have improved value for money, and increased buyer confidence, are credited for this positive trend.
The narrowing gap between second-hand and new home prices is an important development, signaling a shift away from the previous pattern where second-hand prices declined faster than new homes. This shift is expected to influence market expectations positively.
As new home inventories hit record lows, increased supply of quality properties is fueling demand for upgrades. Meanwhile, stabilized second-hand prices are releasing pent-up demand from first-time buyers, contributing to ongoing market activity. This pattern is likely to continue into the month.
In the near term, differences between the new and second-hand markets are expected to persist. Second-hand home sales are projected to grow at a faster pace, supported by demand from first-time buyers, while the recovery for new homes will remain focused on high-quality projects in central urban areas.
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