Housing prices fall at faster pace in February
Home prices fell at a faster pace in February.
According to the stats bureau's (NBS) February survey of home prices in 70 major cities, published Monday:
- New home prices fell 0.14% m/m, a sharper drop than January’s 0.07% decline – ending a six-month streak of slowing price contraction
- On a year-on-year basis, prices fell 5.22%, easing slightly from a 5.43% drop the previous month
The decline was concentrated in smaller cities:
- First-tier cities – Beijing, Shanghai, Guangzhou, and Shenzhen – saw prices edge up 0.1% m/m on average, matching January's increase.
- Prices stagnated in second-tier cities, following a 0.1% m/m increase the previous month.
- Third-tier cities saw prices slide 0.3% m/m, widening from January’s 0.2% decline.
Pre-owned property prices – which aren't subject to government price controls and thus better reflect market sentiment – fell 0.34% m/m, matching January’s decline.
- Notably, pre-owned home prices in first-tier cities fell 0.1% m/m – marking the first decline since authorities rolled out a property support package in September.
Get smart: The real estate recession is increasingly concentrated in poorer, third-tier cities.
- Not only does this exacerbate regional inequalities, but it also means the negative wealth effect of falling real estate prices is hitting poorer households, which have a higher propensity to consume, the hardest.
The upshot: The ongoing real estate downturn could seriously undermine Beijing’s latest efforts to boost consumption.