China’s first‑tier new home prices flat in July, ending 4‑month rebound

China’s first-tier cities’ new home prices remained steady in July, marking the conclusion of a four-month uptick, according to data released by the National Bureau of Statistics (NBS). This stabilization follows an intensive rebound period, with analysts attributing the weakening month-on-month readings to seasonal challenges and an unusually rainy summer. Shanghai and Shenzhen experienced a slight increase of 0.2% in July compared to June, while Guangzhou saw a 0.1% rise. Conversely, Beijing's prices dropped by 0.3%.

Among the 70 large and medium-sized Chinese cities analyzed nationwide, 23 cities witnessed month-on-month increases or remained stagnant in July, a two-city increase from June. Meanwhile, second-tier cities recorded a 0.1% decline in new home prices in July, reversing the flat trend seen in June. Property expert Yan Yuejin from E-house China Research and Development Institute noted that while second-tier cities' prices were nearing a stabilization, the decline was slightly steeper than expected, emphasizing the urgent need for market stabilization.

On a year-on-year basis, first-tier cities experienced a 1.1% decrease in prices in July, a 0.2 percentage point reduction from the previous month. Shanghai was the sole first-tier city to record a year-on-year price increase of 3%, whereas Beijing saw a 2.3% decline, Guangzhou declined by 2.2%, and Shenzhen experienced a 2.9% decrease, although the rate of decline slowed down in Guangzhou and Shenzhen.

The moderating year-on-year decline in new home prices across first-tier cities is seen as a promising sign that the property market is stabilizing, according to Yan. Amidst broad market adjustments this year, the easing rate in price declines signals a steady recovery in the sector. Michelle Kwok, head of Asia real estate and Hong Kong equity research at HSBC, highlighted that factors such as a potentially robust September-October peak season, ongoing land-market strength, and the release of pent-up demand post-rainy summer have contributed to a reassessment of sector risk-reward.

Kwok expects further price stabilization contingent upon the validation of an earnings recovery and a broader physical market recovery. She remains optimistic, predicting that home prices will further stabilize, bolstered by strong demand for luxury properties and healthy liquidity in the secondary market.