China’s Property Market Shows Signs of Recovery as Home Prices and Land Sales Increase

Positive Trends in China's Property Market

China's property market is finally showing signs of bottoming out, with recent data indicating improvements in home prices and land sales. According to Reuters, average city prices rose by 0.15% month-on-month in January, marking the fastest gain since mid-2021. Out of the 100 surveyed cities, 49 experienced growth, slightly more than the 47 cities that saw growth in December.

Government Land Sales on the Rise

In addition to the increase in home prices, government land sale revenue also saw a positive trend. Sales rose by 1.8% in January compared to the previous year, marking the first time in 23 months that land sales have increased. This indicates that Chinese policies may finally be slowing down the decline of the property sector.

Challenges and Potential Setbacks

While these developments are encouraging, it is important to note that the property market still faces challenges. The recent liquidation of Evergrande, once China's largest developer, could impact market confidence. Fitch Ratings suggests that the liquidation process could be lengthy, especially if mainland China does not recognize the Hong Kong court's order. As a result, homebuyers' confidence in private developers may take longer to recover, leading to a shift towards state-owned counterparts.

Government Measures to Support the Market

Following the liquidation, the Chinese government implemented several measures to limit the potential fallout. These measures include lifting homebuying restrictions and providing $46 million in loans to state-backed developers. By boosting consumer spending and commercial investment, the authorities aim to stabilize the property market and support private developers' funding access.

The Path to Recovery

While the recent improvements in China's property market are encouraging, it is still too early to declare a full recovery. The government's continued efforts to regulate the sector and address the challenges it faces will be crucial in determining the market's future trajectory. As the property market stabilizes in some cities, the focus will now be on restoring demand and rebuilding confidence in private developers.

Overall, the signs of recovery in China's property market bring hope for a brighter future, but cautious optimism is advised as the market continues to navigate its way out of the slump.

Source: Business Insider

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By: fdemott@insider.com (Filip De Mott)
Title: China’s Property Market Shows Signs of Recovery as Home Prices and Land Sales Increase
Sourced From: www.businessinsider.com/china-property-market-home-prices-land-sales-evergrande-liquidation-crisis-2024-2
Published Date: Thu, 01 Feb 2024 20:48:31 +0000