Home prices rebound in top cities

Homebuyer sentiment is slowly recovering, but the gains are concentrated in tier-one markets.

According to the stats bureau’s (NBS) March survey of home prices in 70 major cities, published on April 16:

• New home prices fell 0.21% m/m, the fifth month of narrowing declines.
• Secondhand prices – a more timely barometer of housing-market dynamics – fell 0.24% m/m, the smallest decline in a year.

The improvement was driven mainly by first-tier cities – Beijing, Shanghai, Guangzhou, and Shenzhen.

• On average, the four cities saw new home prices rise 0.2% m/m in March – the fastest growth since April 2023.
• That came on the heels of February’s 0.02% gain, which snapped a nine-month run of declines.
• Meanwhile, prices of pre-owned homes grew 0.4% m/m.

The recovery has yet to gain traction in smaller cities.

• In second- and third-tier cities, new home prices continued to decline, down 0.2% and 0.27% m/m, respectively.
• Those readings were slightly better than February’s print, but don’t yet signal a recovery in buyer sentiment.

Get smart: Top-tier cities were bound to stabilize ahead of the rest, thanks to stronger demand fundamentals.

• Improvements on a national scale will take much longer to emerge.

Get smarter: It’s too early to call an end to China’s housing slump.

• Massive supply overhangs remain major headwinds – including unsold developer inventory and private resale listings.
• As long as those overhangs persist, any rebound is likely to be localized, volatile, and difficult to sustain.