Guangzhou has constantly underperformed other first-tier Chinese cities in the past few months, a sign of rising polarisation amid a recovery in the housing market, according to the SCMP-Creda index. Average new home prices in Guangzhou, the capital of Guangdong province, fell 1.02 per cent last month from April, compared with a gain of 8.13 per cent in Shanghai, 6.71 per cent in Shenzhen and 4.76 per cent in Beijing. The four cities are often grouped as China's first-tier cities and regarded as the most important housing markets, although their combined new home sales accounted for less than 5 per cent of national transactions last month. Guangzhou has suffered a fall in new home prices in four of the past five months, except February. In comparison, prices in Shenzhen dropped only in March, while Shanghai and Beijing had two months of declines during the period. Of the 10 major cities tracked by the SCMP-Creda index, a collaboration between the South China Morning Post and property consultancy China Real Estate Data Academy, Wuhan and Chongqing also saw a drop in new home prices, by 1.65 per cent and 6.11 per cent, respectively. That is again evidence of polarisation. "New policies such as interest rate cuts and easier borrowing from local governments' housing provident funds accelerated the market recovery in May," said Chen Sheng, Creda's dean and an industry veteran. "Such a trend will continue in June." The latest SCMP-Creda index showed total new home sales in the 10 cities jumped 10.6 per cent last month for the third consecutive month, although some analysts are still concerned about the sustainability of a recovery that has been mainly driven by easier policies since September last year. Except for Chongqing, sales improved in all the cities, led by a 31.3 per cent month-on-month increase in Tianjin. Chen said commercial banks would begin to implement the 40 per cent down payment for second-home buyers this month, down from the previous 70 per cent, which would accelerate sales of bigger and more expensive projects due to strong demand for upgrades. "The stock market has been volatile recently, making investors jittery," Chen added. "They'll probably sell stocks to buy homes." That is what many developers are expecting, too. They will quicken the pace of new project launches in the second half of the year, particularly luxury ones in first-tier cities. In year-on-year terms, prices rose the fastest last month in Tianjin, by 30.4 per cent. But Guangzhou suffered a tumble of 12.9 per cent and Chongqing saw a 10.1 per cent decline.