New home prices in China increased at the fastest rate in over two and a half years in March compared to the previous month, according to a private survey reported by Reuters on Monday. This growth was driven by various measures aimed at supporting the struggling property sector. Data from China Index Academy revealed that the average new home price in 100 cities rose by 0.27 per cent in March, marking the largest increase since July 2021, compared to a 0.14 per cent rise in February. China's property market has faced challenges since 2021 due to regulatory actions targeting high leverage among developers, leading to liquidity issues. Despite efforts by local authorities to stimulate sales and improve liquidity, the sector continues to face difficulties. In a recent move, authorities in Beijing slightly relaxed home purchase restrictions by removing a rule that prevented individuals from buying a home in the city within three years of a divorce. In March, 43 cities saw an increase in new home prices compared to February, with Shanghai recording the highest rise of 1.09 per cent and Changchun experiencing the largest decline of 0.68 per cent. However, total sales by value from 100 real estate companies dropped by 49.0% year-on-year in the first quarter of the year, indicating that a recovery for the sector is not yet imminent. The Academy stated that the implementation of new property market policies could gradually improve market sentiment, potentially leading to a reduction in the decline of new home sales in the second quarter.
