New-home prices across 100 Chinese cities recorded a modest month-on-month rise in March, reversing a decline in February, according to a private property survey released on Wednesday. The China Index Academy, one of the country’s largest property research firms, reported that new-home prices increased 0.05% from the prior month after a 0.04% drop in February.
The firm linked the small rebound to a seasonal boost in demand concentrated in major cities and said an increase in the supply of higher-quality projects in core urban markets helped underpin the recovery in new-home sales during March.
"The continuity of this recovery in April will be critical," the China Index Academy said. "If momentum can be maintained in major cities, it will help improve market expectations and lay a stronger foundation for stable market performance throughout the year."
The report sits against a backdrop of a prolonged property downturn that began after policy measures introduced in 2020 aimed at curbing excessive borrowing by developers. Those curbs have strained developers' liquidity, leaving many firms unable to service debt or complete pre-sold housing projects.
Analysts and rating agencies note that the extended slump has complicated policymakers' attempts to rebalance the economy while insulating it from external pressures cited by the survey, including rising trade protectionism among major partners and the effects of the war in the Middle East.
Alongside the small gain in new-home prices, the report found that month-on-month declines in second-hand home prices narrowed. However, the China Index Academy noted a potential headwind: if buyers shift more quickly toward the secondary market, that could weigh on sales of new homes.
Commenting on the wider market dynamics, Shi Lulu, director of Asia-Pacific corporate ratings at Fitch Ratings, cautioned in a recent research note that weak employment conditions, elevated housing inventory and other fundamental challenges leave overall market sentiment fragile. She added that escalating geopolitical conflicts have increased uncertainty about whether any recovery can be sustained.
For market participants and policymakers, the March data present a mixed signal: a small, seasonally driven improvement in headline new-home prices that remains vulnerable to structural constraints in demand and supply, as well as to broader external shocks.
Implications for sectors - The housing and property development sectors are directly affected by the pricing and sales trajectory reported. Financial institutions and creditors with exposure to developer debt and pre-sold projects also face ongoing liquidity and completion risks. Construction and related supply chains may experience fluctuating activity if the recovery does not gain traction.