The decline in China’s new home prices narrowed last month, as easing measures rolled out to revive its ailing US$1.7 trillion housing market took effect. The average price of new homes in the 70 cities covered by the National Bureau of Statistics (NBS) fell 0.1 per cent in February, down from the 0.3 per cent decline recorded in January, according to data released on Wednesday. The average price of lived-in homes dropped 0.3 per cent last month, the same as January. “This shows that the easing measures did help to slow down price declines,” said Yan Yuejin, the director of Shanghai-based E-house China Research and Development Institute. “But there is still a long way to go before the market reverses to an obvious rising trend.” The improvement in prices of new flats came after the central government rolled out some easing measures, including lower mortgage rates and faster home loan procedures, to help improve sentiment. These prices have now fallen for six consecutive months since September. China’s prices of old and new homes narrowed their declines in January The resurgence of Covid-19 infections in China’s first-tier cities, however, could sap some demand. Shenzhen, the southern technology hub seen as “China’s Silicon Valley”, will be locked down for seven days until March 20 for three rounds of citywide mass screening. The neighbouring industrial city of Dongguan will also deploy similar Covid-19 containment measures. China home market starts thawing as December’s price drops slowed “People in Shenzhen are more concerned about their health than buying homes,” said Andy Lee, CEO for southern China at Centaline Property Agency (China). Moreover, with the exception of new projects in prime locations, the overall sell-through rate was just 30 to 40 per cent, Lee said. “Seldom do we see all units being sold out within hours in new projects any more,” he said, adding that home prices could see further consolidation, as most mainland Chinese developers were under severe pressure to reduce their debt. In Shenzhen, a city of 17.5 million people, only 900 lived-in homes changed hands in February, compared with 8,000 to 9,000 such deals in normal conditions in 2020, Lee said. China’s new home prices go from ‘overheated to over-cooled’ The average prices of new homes in first-tier cities did, however, outperform those of lower tier cities and posted 0.5 per cent growth last month from January, the NBS data shows. Average prices in lower tier cities were either flat or in decline. Beijing and Guangzhou each reported an increase of 0.6 per cent in the average prices of new homes, while in Shanghai and Shenzhen they were up 0.5 per cent and 0.4 per cent, respectively. NBS property investment data released a day earlier shows that the total value of residential sales dropped 22.1 per cent year on year to 1.37 trillion yuan (US$215.8 million) in the first two months of this year. The residential floor area sold declined by 13.8 per cent to 134.6 million square metres, while flats available for sale rose 14.7 per cent to 283.1 million square metres. To stop the cracks in the sector from widening, China cut the mortgage rate and took the loans developers used for mergers and acquisitions out of the calculation of their debt. Local authorities too eased policies to help the real estate industry recover. Earlier in February, Heze became the first city in China’s northern Shandong province to introduce easing measures, with four major banks lowering the minimum deposits for home purchases to 20 per cent from 30 per cent. Within the next two weeks, eight more cities including Nantong in the eastern Jiangsu province and Foshan, part of the Greater Bay Area, too lowered their down-payment requirements.