China's new home prices decline in Feb as govt's stimulus efforts fall flat

China's property slump persisted in February, with official figures on Monday showing declines in prices, investment and sales, as government measures and promises of more stimulus did little to boost demand in the crisis-stricken sector. 

New home prices dipped 0.1 per cent versus a month earlier after two months of relatively steady prices, showed Reuters calculations based on National Bureau of Statistics data. 

On a year-on-year basis, new home prices fell 4.8 per cent versus a 5.0 per cent drop the previous month. 

Analysts said new home prices may not fully reflect market dynamics due to local governments' informal price controls. 

The data also showed a decrease in resale home prices across so-called tier-one, tier-two and tier-three cities, indicating a downturn both on a monthly and annual basis. 

"February's data showed that it would be wise not to take their foot off the pedal in terms of policy support," said Lynn Song, chief economist for Greater China at ING. 

"We expect that prices will indeed find a trough in 2025, though an L-shaped recovery is more likely than a U- or V-shaped recovery," said Lynn. 

The government has prioritised property market stabilisation in its 2025 agenda, urging city-specific measures to ease home-buying restrictions and stimulate demand for upgraded housing. 

Initiatives include the introduction of city-specific policies to adjust home-buying curbs and tap into the potential demand for first homes and better housing, policymakers said. 

Still, structural issues such as demographic shift, stagnant income and a glut of unsold homes continue to dampen sentiment. 

The sector's troubles trace back to 2021 when a regulatory crackdown on developer debt triggered a liquidity crisis, leaving projects unfinished and buyers wary. Once accounting for a quarter of GDP, the property meltdown has compounded pressure from weakening consumer confidence and US trade tariffs. 

Centaline property analyst Zhang Dawei said recovery depends on broader economic stability, and that purchasing homes now ties closely to job security and long-term income expectations. 

January–February data showed property investment and sales fell 9.8 per cent and 5.1 per cent year-on-year, respectively. New construction starts plummeted 29.6 per cent following a 23.0 per cent drop in 2024. 

Stabilising property investment could remain further off. 

Other than seeing prices bottom out, inventories likely need to normalise before developers ramp up new investment, said Lynn.

"This process will likely be rather uneven, as developers will likely be more selective in where to build."  

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