Surprising development on the crisis-ridden Chinese real estate market: Prices for new apartments rose more sharply in March than they have in over two and a half years. The average price in 100 selected cities rose 0.27 percent from the previous month, according to data released on Monday by real estate research institute China Index Academy. This is the largest increase since July 2021. In February the increase was 0.14 percent.
China’s real estate sector has long been a central pillar of the recovery, but since 2021 it has slipped from one crisis to the next. It has come under pressure from a regulatory crackdown. They want to prevent excessive indebtedness, which would reduce liquidity and increase the risk of default for construction companies. The number of cities in which prices for new residential properties rose in March was 43. The mega-metropolis Shanghai recorded the highest increase of 1.09 percent. The largest decline was recorded in the northeastern city of Changchun at 0.68 percent.
There is currently no sign of a trend reversal in the real estate market. The total sales of 100 real estate companies fell by 49 percent in the first three months of the year compared to the same period last year, the study further shows. The government and local authorities are trying to stabilize the market. The Beijing municipal government has relaxed house-buying regulations, preventing individuals from buying an apartment in the city within three years of divorce. Such measures could lead to a gradual improvement in market sentiment, according to the China Index Academy. The decline in new home sales is therefore expected to moderate in the second quarter.