In February 2025, new home prices in China decreased by 4.9% year-on-year and 0.1% month-on-month. This follows a 5% drop in January compared to the previous month.
The housing sector is under continued strain. The People’s Bank of China set today’s USD/CNY reference rate at 7.1688, higher than the estimated 7.2199, marking the strongest value for the yuan since November 2024.
Monetary Policy Considerations
Reports indicated China may consider easing monetary policy at an appropriate time. Additionally, Shenzhen has announced relaxed housing finance rules, while a new 30-point plan aims to stimulate domestic consumption.
These shifts in the housing market and monetary policy decisions are shaping expectations. House prices continue to slide, showing weakness in a sector that has long been a pillar of economic stability. With February marking another drop in property values, there is little sign of relief yet. While the 0.1% month-on-month decline suggests some moderation compared to previous figures, the overall trajectory remains downward. The annual decline paints a broader picture of prolonged difficulties rather than a temporary blip.
Meanwhile, the exchange rate setting by the People’s Bank of China reflects a firm stance on currency management. By fixing the yuan at its strongest level since late 2024 and well below estimates, the central bank has made its position clear. This choice signals an attempt to counter depreciation pressures while maintaining control over capital flows. The difference between market estimates and the actual fixing suggests authorities remain committed to stability, regardless of external trends.
Market Sentiment And Future Outlook
Amidst these policy moves, officials are weighing further adjustments to monetary policy. Recent reports indicate an openness to easing at the right moment, though specific details remain unannounced. Any such decision would likely aim to support economic activity, especially as growth concerns persist. Shenzhen’s move to relax housing finance rules suggests local governments are already taking steps to cushion the sector. The newly announced 30-point plan for boosting domestic consumption ties into this, with authorities displaying a multi-pronged approach to sustaining demand.
All of these developments are shaping market sentiment. Housing policies, liquidity measures, and currency management will all play a role in the coming weeks, and responses to these factors must reflect careful consideration.
