China's top cities see home prices rise for first time in 10 months

The National Bureau of Statistics (NBS) reported a modest 0.2% rise in new home prices across China's biggest cities for March, a welcome change after ten months of decline. This marks the first positive movement since June last year, with Shanghai and Guangzhou seeing a 0.3% increase, and Shenzhen and Beijing showing 0.2% and flat growth respectively. While this signals a potential pause in the property market's downturn, analysts remain cautious.

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We believe it remains premature to conclude that this signals a broader stabilisation in China’s housing market. It will be important to observe whether the price improvements are sustainable.

Edward Chan from S&P Global Ratings emphasized that it's too early to confirm a broader market stabilization, stressing the need to observe sustained price improvements. Griffin Chan of Citi Research noted that while the market hasn't worsened and policy support is evident, the recovery is stable but not overwhelming. Investors are still hesitant, awaiting more conviction before increasing their investments.

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Most investors do not anticipate a substantial turnaround and need more conviction for stabilising prices in key cities before increasing investments in the sector.

Despite the cautious outlook, the data suggests that the property market correction in March might present opportunities for investors. With sales recovery showing signs of continuation into April, the current environment could be favorable for acquiring property assets in key cities. The cautious optimism reflects a delicate balance between acknowledging the positive shift and recognizing the underlying challenges that still need to be addressed for a robust recovery.

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Given sales recovery started in the first quarter and continued in April, we [believe that] sector correction in March offered a good opportunity to add property names in April.