New home sales in China's first-tier cities slide as curbs have effect

New home sales in China's first-tier cities declined last month as a result of strict purchase curbs, but analyst said transaction volumes are likely start rising again as deals in these cities are driven by supply, not demand.

Statistics from Centaline Property showed that the transacted area of new homes in Shanghai fell 6.7 percent month-on-month to 363,000 square meters in February, domestic news portal nbd.com.cn reported Wednesday. That was the lowest figure for any February in the past six years.

New home sales in Shenzhen, South China's Guangdong Province also sank last month.

At least 804 new homes were sold in the month, tumbling around 50 percent from the previous month, latest data from the Urban Planning, Land & Resources Commission of Shenzhen showed.

Yan Yuejin, research director of the Shanghai-based E-house China R&D Institute, said new home transactions would rebound in spite of cities' strict regulations. The reason, he said, is that transactions in first-tier cities rely on supply instead of demand.

"If developers rush to roll out new homes, both the volumes and prices will bounce," he said.

About 20 cities across China rolled out limitations on home purchases starting October 2016 to stabilize local property markets.

Also, since the start of 2017, banks in cities like Beijing, Guangzhou and Qingdao, East China's Shandong Province have tightened their mortgage policies, discounting mortgage rates as much as 10 percent off the official benchmark rate, down from 15 percent previously, according to media reports.

Data from the National Bureau of Statistics on Feuburay 22 showed that new home prices remained stable in first-tier cities in January.