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BEIJING: China’s new-home prices in April fell for the first time month-on-month since December, official data showed on Wednesday, depressed by fragile demand in small cities and strict, widespread COVID-19 lockdowns.

Average new-home prices in 70 major cities fell 0.2% on a month-on-month basis, compared with zero growth in March, according to Reuters calculations based on April data from the National Bureau of Statistics (NBS).

New home prices rose 0.7% from a year earlier, the slowest pace since October 2015 and easing from a 1.5% gain in March.

The outlook for China’s property market has been bleak in recent months.

The market, a pillar of the world’s second-largest economy, has been weakened by a government clampdown on excessive borrowing from developers.

Last month, more than 40 cities had taken steps to stoke home buyers’ interest, including subsidies, cuts in mortgage rates and allowing larger loans from provident housing funds.

The northern city of Tianjin issued a consultation draft on 24 April that provided for increasing the maximum loan from such a fund to first home buyers to 800,000 yuan ($120,000) from 600,000 yuan.

Chinese financial authorities on Sunday allowed a further cut in mortgage loan interest rates for some home buyers.

In April, 47 among 70 cities surveyed by the NBS reported new home prices falling from the previous month, compared with 38 cities recording a decline in March. New home prices in tier-three and tier-four cities fell a monthly 0.6%, extending from a 0.2% drop in March.

China new home prices down less in Dec on promotions, easing curbs

Prices in tier-two cities, such as Chengdu and Nanjing, fell 0.1%, compared with zero growth in March. In tier-one cities, such as Shanghai and Beijing, prices rose 0.2% versus 0.4% growth in March. “Housing prices dropped in more cities in April.

The housing sector is going through a crisis,“ said Zhang Zhiwei, chief economist at Pinpoint Asset Management. “The government policy has turned more supportive but not overwhelmingly so.

There are still quite many restrictions.“ COVID-19 outbreaks and prolonged lockdowns in dozens of cities have further weighed on the already vulnerable property market. Shanghai has endured lockdowns for about seven weeks.

It plans to resume outdoor activities in stages and lift the lockdowns by June.

“Household income likely got damaged by the Omicron outbreaks, and the lockdowns made housing transactions and investment difficult,” said Zhang. “It is not clear when the housing sector will rebound.” For April, new home prices in Shanghai were unchanged from a month earlier.

They had been rising since November 2020. Data for April issued on Monday, showing a plunge in property sales and a fall in investment, added to the uncertainty over the outlook for the property market.

Property sales by value in April slumped 46.6% from a year earlier, the biggest drop since August 2006, and sharply worse than the 26.17% fall seen in March.

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