Owing to the slowdown in economic growth, weakening external demand and persistent implementation of stringent controls over the residential market, China’s property market got a rough start in the year of 2012, with nationwide home sales in the first four months tumbling nearly 12% on a yearly basis. However, in the wake of the weaker-than-expected GDP growth rate of 7.6% in Q2 2012 (the lowest in 3 years), which had exacerbated fears of a hard landing of the economy, the Chinese Government in mid-2012 started to fine-tune her housing policies in order to bolster the market sentiment. These included back-to-back interest rate cuts in June and July, three reductions in Reserve Requirement Ratio since late 2011, as well as the provision of preferential mortgage rates for first-time homebuyers. As a result, the buying sentiment in the property market was gradually improved and home prices began to bottom out in the second half of the year. In December, the average home price observed its first year-on-year increase over the past nine months, according to data from China Index Academy.
Entering 2013, the new leadership of China is expected to inherit all the existing housing measures, and it will continue its effort to support housing demand from low income households and first-time homebuyers. In mid-December, the Government issued a statement following a two-day Central Economic Work Conference in Beijing, reiterating her determination to build more affordable housings, as well as to push forward urbanisation and boost both public and private investment. About 6 million of affordable housing units will start construction in 2013 and 4.6 million units will be completed within this year, said Jiang Weixin, the Housing and Urban-Rural Development Minister.
Some recent statistics also show signs of improvement in the Chinese economy. HSBC Flash Purchasing Manager’s Index (PMI) in December reached a 19-month high at 51.5, after 50.5 in November, indicating a two straight months of expansion in the manufacturing sector. China’s GDP growth, on the other hand, is estimated to rebound to 7.8% in Q4 2012 from Q3’s 7.4%, according to a Reuters poll.
As the Chinese economy gradually stabilises and home sales continue to rebound, more economists forecast a brighter outlook for the property market in 2013. Another market report expects China’s home prices may further climb up by 3% to 5% this year. In a recent survey conducted by China Academy of Social Science (CASS) among over 100 economists and entrepreneurs, nearly 60% of respondents hold optimistic views for property market in 2013. Nevertheless, a massive rebound across the country is unlikely to be seen, given the current housing measures which are believed to remain the same.