February 22, 2022: -China’s new home prices rose for the first time since September every month, official data for January showed, as efforts to soften the blow from strict regulatory curbs on property supported buyer sentiment, particularly in big cities.

Average latest home prices in China’s 70 major cities increased 0.1% from a month in January, compared with a 0.2% drop in December, according to Reuters calculations from data released by the National Bureau of Statistics (NBS).

The property market of China, accounting for a quarter of gross domestic product by a few metrics, has slowed because of Beijing’s push to cut leverage in the sector amid defaults at heavily-indebted players like China Evergrande Group.

To ease the pain for developers, authorities have taken a slew of measures since 2021, which include giving real estate firms more accessible access to funds from escrowed accounts.

“The marginal improvement in the financial and credit environment since the fourth quarter of the previous year helped the value of transactions to bottom out,” said Xu Xiaole, an analyst at Beike Research Institute.

Credit conditions are expected to continue to ease, which will help lift transactions and stabilize home prices, Xu said.

The number of cities reporting price gains increased to 28 from 15 in December, driven by the larger tier-one and tier-two cities.

Average prices of new housing in the country’s four largest cities, Beijing, Shanghai, Guangzhou, and Shenzhen, swung from a month-on-month decrease of 0.1% in December to an increase of 0.6% in January, the NBS said in a different statement.

The most significant swing was seen in Guangzhou, where prices rose 0.5% from a 0.6% decline.

Beijing, Shanghai, and Shenzhen surged 1.0%, 0.6%, and 0.5%, respectively.

“The increase in tier-one cities has less to do with seasonal factors and more due to purchasing power between credit policies in place,” said Yan Yuejin, research director of Shanghai-based E-house China Research and Development Institution.

In the Previous month, developers in Shenzhen and Beijing took some measures to boost sales, offering buyers a 1% discount for cash payments.

“Prices in tier-one cities will continue to rise,” Yan said.

Though easing measures are helping, the recent home prices rose at the slowest speed of 2.3% since December 2015 from a year earlier, narrowing from the 2.6% growth recorded in December.

While keeping curbs on speculative purchases and blind borrowing, the central government is expected to roll out more measures to support buyer sentiment, which has sharply weakened due to the liquidity crisis faced by developers.