China home prices start to recover

China's home prices rose in February for the first time in 18 months, a sign that government efforts to revive the battered market are starting to pay off.

New home prices in 70 cities, excluding state-subsidized housing, gained 0.3 percent after being unchanged in January, the National Bureau of Statistics reported yesterday. Prices snapped an 18-month decline in the secondary market, rising 0.12 percent.

Authorities have ramped up financial support for cash-strapped developers and lowered mortgage rates in about two dozen cities after a crackdown sparked dozens of bond defaults and curbed demand for housing.

In another sign of the turnaround, sales rose in February for the first time in 20 months. The value of new home sales by the 100 biggest real estate developers climbed 15 percent from a year earlier to 461.6 billion yuan (HK$525.2 billion), data released last month from China Real Estate Information Corp showed.

Beijing is aiming for a soft landing in the real-estate sector, rather than trying to fuel rapid growth. At the National People's Congress, the government last week vowed to prevent unregulated expansion of the sector and made it clear it will focus on shoring up the balance sheets of high-quality developers.

But a rebound in price and volume will be mild, as developers still need to cope with the liquidity crunch and the uncompleted homes, said Centaline Property Agency.

He expects sales volumes to pick up 20 to 30 percent annually in 2023 and prices to rise 5 to 10 percent.