When you hear about the residential real estate market in China, you’ve likely heard about extreme price growth. Various areas in China have seen significant rises in house prices for quite some time. While this puts property investors in a good position to capitalise on this activity, home buyers have not seen the same result.
Fortunately, there are signs of improvement for home buyers across China. New data from the National Bureau of Statistics of China showed that sale prices for residential property are dropping.
Over May, the Bureau of Statistics found sale prices for brand new buildings dropped in 35 cities across the country. In April, there were only eight cities that experienced price declines, showing a large jump from month to month.
While the number of cities that saw declines increased, so did prices. In April, the highest price drop recorded was 0.7 per cent, but in May this figure doubled to 1.4 per cent.
There were very similar results for established dwellings across China, too. In May, prices fell in 35 cities, with the largest drop being 0.9 per cent. However, in April only 22 cities saw a decline in established home prices.
Despite the declines, there were still many cities examined that experienced price rises. In terms of brand new dwellings, 15 cities saw price rises of up to 0.3 per cent for the month.
Established dwellings saw even better results. Sale prices rose in 19 cities by up to 0.5 per cent.
Chinese consumers positive
While house prices saw a decline in May, Chinese consumers are still maintaining a positive attitude toward the national real estate market.
In fact, figures from Westpac – MNI China’s Consumer Sentiment Indicator stated “consumers’ attitudes towards real estate were noticeably firmer in May”.
House price expectations have improved significantly, too. As a result, this has reversed the declines seen in previous months.
“Consumers appear to be looking through recent updates on house prices that indicate that weakness is now more widespread than earlier in the year,
with both the new and secondary dwelling markets visibly deteriorating,” the Westpac report read.
“Countering that, selective policy easing has been announced in terms of both mortgage lending and local controls on investor activity.”
Overall, Chinese consumer sentiment increased 3.4 per cent to 121.2 points in May. Sentiment has actually been improving over the first few months of 2014, painting a bright picture for the coming months if this activity continues.