China Property Prices Stabilize as Government Eases Restrictions

The Government of China is attempting to stabilize a struggling property market that contributed to a second-quarter economic growth rate of 4.3%, the slowest in over three years. Data from the National Bureau of Statistics shows that new home prices fell 0.1% in July from June and 3.2% on an annual basis, with property sales, investment, and new construction starts all declining at an accelerated pace through the first seven months of the year.

Recent reports indicate a trend toward stabilization, as price declines narrowed across 70 major cities. In first-tier cities—Beijing, Shanghai, Guangzhou, and Shenzhen—new home prices fell 1.1% year-on-year, an improvement from the 1.3% drop in June. Second-hand home prices in these cities also saw a narrower decline, moving from 4.9% to 3.7%. While first-tier cities saw month-on-month price increases, prices continued to fall in second- and third-tier cities, creating a K-shaped recovery where gains are concentrated in only 17 of the 70 tracked cities.

To combat the downturn, the government of Beijing eased home-buying restrictions in central areas and increased borrowing limits via its housing provident fund. These local efforts align with a directive from the Political Bureau of the Communist Party of China Central Committee to maintain stabilization efforts and pledges from top national leadership to accelerate fiscal spending.