China prices still sliding
China’s new‑home prices extended declines in February, though first‑tier cities showed signs of stabilization after months of weakness—national annual declines deepened and recovery remains uneven, Reuters reported. Global housing stress alters risk sentiment and capital flows that can affect Canadian mortgage funding spreads.
New‑home prices fell 3.2% year‑on‑year in February — the steepest annual drop in eight months — while the monthly decline narrowed to 0.3% from January’s 0.4%.([tradingeconomics.com)] The NBS 70‑city index marked its 32nd consecutive month of contraction, and 53 out of those 70 cities reported month‑on‑month price falls in February.(tradingeconomics.com) Among first‑tier markets, Beijing and Shanghai recorded month‑on‑month gains of 0.2% each, Guangzhou was flat and Shenzhen slipped 0.3% — illustrating the uneven recovery concentrated in coastal megacities.(scmp.com) S&P Global Ratings now expects primary real‑estate sales to fall 10–14% in the year ahead, and a Reuters quarterly poll showed analysts forecasting further price declines before stabilisation in 2027.(cnbc.com) Analysts note material offshore exposure — roughly $300 billion of Chinese real‑estate debt is estimated to be held by foreign creditors — and asset managers such as Pimco say China’s property distress remains a key signal for junk‑bond risk appetite in global markets.(ainvest.com) Canadian fixed‑rate mortgage pricing hangs on the 5‑year Government of Canada yield as a benchmark, while lenders add funding spreads that historically widen during global risk‑off episodes; Canadian lenders have tightened advertised discounts when credit spreads rose in prior market stress.(stiermortgages.ca) The Bank of Canada’s 2025 Financial Stability Report flagged external trade and global risk shocks as transmission channels to household stress, meaning continued weakness in China that depresses global risk sentiment can translate into wider Canadian funding spreads and margin pressure for wholesale mortgage funders.(bankofcanada.ca)
