China’s new home prices managed a small increase again in September, a private Reuters survey showed

BEIJING (Reuters) – China’s new home prices rose slightly in September, traditionally a peak season for house hunting, a private survey showed on Tuesday, extending months of weak gains in a crisis-hit market that has worried the country’s leaders.

The average price in 100 cities rose 0.14 percent, compared with 0.11 percent the previous month, data released by real estate researcher China Index Academy showed.

Compared to a year earlier, the average price increased by 1.85%.

Of the 100 cities, 17 reported price gains, up from 35 in August, underscoring the cautious buyer sentiment that has cooled the housing market in recent years.

The market has been in a slump since 2021 after a string of cash-strapped developers defaulted on loans, leaving behind large inventories of new homes and unfinished projects.

Authorities have since lifted many home-buying restrictions previously imposed to discourage speculators. They also lowered mortgage rates and down payment requirements. However, the easing had a limited effect on demand.

In the latest attempt to restart buying, the central bank last week unveiled a package of monetary stimulus, including a cut in the minimum down payment rate to 15 percent for all housing categories.

The southern metropolis of Guangzhou on Sunday became the first major city to lift all restrictions on home purchases. Shanghai and Shenzhen have said they will ease restrictions on purchases by non-local buyers and lower the minimum down payment rate for first-home buyers.

Even so, the measures are likely not enough to trigger a market turnaround, Capital Economics economist Huang Zichun wrote in a research note last week.

“The key to making a real difference is to provide more tax funding for the purchase of unsold homes.”

The prolonged market downturn has also eroded the wealth of households, which often view housing as their biggest investment, reducing domestic consumption.

To help households struggling to pay off loans, regulators on Sunday ordered banks to cut interest rates on all existing mortgages by the end of October.