China residential market shows improvements

HONG KONG (May 24): The residential property market in China has shown signs of stabilising after several quarters of falling prices, said CB Richard Ellis in its “China Market Flash” report dated May 13.

“Data from Soufun1, a real estate portal in China, shows that after 11 consecutive months of faltering prices, average property prices in 100 major cities were flat in April, 2015,” the report said.

"Preliminary figures and anecdotal evidence for the same month point to a strong rebound in transaction volumes in Tier I and major Tier II cities. The latest rate cut, the booming A-share market and improving liquidity are expected to help support the further recovery of the residential market in the coming quarters," it added.

Tier I cities are densely populated cities such as Shanghai and Beijing, while Tier II cities are provincial capitals such as Chengdu and Nanjing.

The Chinese government has relaxed its grip on the property sector, including lifting home purchase restrictions in most cities, and lowering effective mortgage rates and down payment requirements for prospective homebuyers, including first-time homebuyers and multi homebuyers.

The report added that although the series of recent rate cuts will benefit the residential sector in the near term, they could undermine the government’s efforts to improve housing affordability in major cities.