HONG KONG (Reuters) - China’s new home prices may have bottomed and even started to rebound in January after eight months of decline, industry surveys showed, fuelling hopes that official data due on Tuesday will confirm a recovery in the massive property market.
Signs that some developers are starting to raise prices in major cities follow the central bank’s surprise rate cut in November and its decision to lower lenders’ reserve requirements earlier this month, as it tries to revitalize an economy growing at its slowest rate in more than two decades.
Yet any recovery is patchy and most developers are still discounting to shift unsold inventories, according to industry sales data for January. Industry executives caution prices may slide again in February as China gears up for long lunar new year holidays starting next week.
“Sales in the market will slowly go up from the second quarter, because policy now is more favorable and customers’ confidence is higher,” said Ada Wong, vice president of China Aoyuan Property.
“But speaking of the whole year, any rise would only be modest.”
The National Bureau of Statistics announces average January new home prices in major cities on Tuesday.
The property industry accounts for some 15 percent of China’s gross domestic product and any hint of a bounce in new home prices will be positive for sentiment after disappointing trade figures on Feb 8.
The world’s second-biggest economy grew 7.4 percent in 2014 - its slowest pace in 24 years - and many analysts expect the government to lower its GDP target to around 7 percent this year.
The green shoots for the property sector appeared early this year when some developers began raising prices in upper-tier cities such as Shanghai and Chongqing, property research firm CRIC said in a report released on Feb 10.
Top developer Vanke, for instance, hiked prices at its residential project in southwestern Chongqing city by 17 percent, the report said. China Overseas Land and Investment also set the prices for its new development in the southern city of Shenzhen 15 percent higher than neighboring projects.
CRIC, which tracks 60 cities, estimates new home prices in first- and second-tier cities might have risen 0.64 percent in January from December, although it forecasts a 0.1 percent drop in prices countrywide.
Research firm CREIS, which tracks 100 major cities, estimates January new home prices may have gained 0.2 percent, after eight consecutive monthly declines. Prices still would be 3.1 percent lower than the same time last year.
Aoyuan is one of a handful of Chinese developers which reported higher sales this week, posting a 16 percent jump in January. Evergrande Real Estate said sales climbed 5.1 percent and Shimao Property reported a 19 percent gain.
Many developers, however, continue to struggle with slumping sales. Of some 19 companies that announced January sales this month, 11 posted falls of 12 percent to 50 percent.
“There was simply less saleable area,” said a spokesman for Poly Real Estate, which posted a 26.7 percent fall in sales.
“But for the whole year, we expect to see stable growth.”
Editing by Stephen Coates