Global Impact: China turns up the heat on its property sector as economy slowly rebuilds

Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world

In this edition, we examine the outlook for China’s property sector after the average new home price in China remained unchanged in January having fallen for 16 straight months

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The average price of newly completed homes rose last month in 36 of the 70 cities tracked, more than double the 15 recorded in December. Photo: EPA-EFE

Published: 2:15pm, 20 Feb 2023

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China’s residential property market defied gravity in the first month of 2023, as more urban centres across the country reported rising prices than declines, auguring well for an economy that is still trying to regain its growth momentum after climbing out of a post-coronavirus slump.

The average price of newly completed homes rose last month in 36 of the 70 cities tracked, more than double the 15 recorded in December. Falling prices were noted in 33 cities last month, compared with 55 in December.

The price of second-hand homes rose in 13 cities last month, compared with seven in December.

The official statistics added together to illustrate an economy that is clawing its way out of a slump, but the world’s largest property market still has long way to go before returning to its previous dizzying heights, as rising unemployment in the technology sector keeps a lid on prices and sales.

In fact, transactions are likely to shrink this year, according to the international credit rating agency Moody’s Investors Service. That will exacerbate the debt pressure on local government authorities and weaker banks, Moody’s said.