China home prices stabilize following restrictions

China's property market in major cities has stabilized as authorities move to curb price rises.

Of 70 large and medium-sized cities surveyed in February, more than half of them saw month-on-month price declines or rises less than 0.5 percent for new residential housing, according to the National Bureau of Statistics (NBS).

Among them, 12 saw a price drop, with new residential housing prices in two cities flat in February, said NBS senior statistician Liu Jianwei.

Another 19 cities saw home price gains higher than 0.5 percent last month.

New residential home prices in first-tier cities such as Beijing and Shanghai rose 0.1 percent on average in February, while second-tier and third-tier cities registered a slightly higher price gains of 0.3 percent and 0.4 percent, respectively.

"The growing trend of new housing prices in first-tier cities was restrained after restrict purchase measures were taken," said Yan Yuejin, a property market analyst.

"The house prices in second-tier cities need to be further controlled due to big February gains in some cities. Third-tier cities saw a faster price rise due to their loose house purchase policies."

On a year-on-year basis, February gains of new residential home prices in 20 cities decelerated from January, added Liu.

"Sales of newly-built homes in 15 major cities including Beijing, Shanghai, Guangzhou and Shenzhen slowed in February on the back of targeted local government policies," Liu said.

Noticeably, in the second-hand home transactions market, the prices were up 0.4 percent month on month in February, maintaining the growing trend for 23 months.

"The rigorous strictures were mainly targeted for the new housing market and the price change is not evident in the second-hand home market," said Zhang Dawei, analyst with real estate agency Centaline.

Since October last year, dozens of Chinese cities have announced measures including purchase limits and mortgage restrictions to prevent prices from rising out of control.

The latest round of restrictions came after two years of policy easing, starting with relaxation of purchase restrictions in 2014 and fueled by the pro-growth policies, including interest rate cuts.

Many third-tier and fourth-tier cities have excess supply in their real estate markets, while housing prices in some bigger cities with access to better education and medical services are moving swiftly upward.

"We will take more category-based and targeted steps to regulate the real estate market," read a government work report delivered at the annual parliamentary session earlier this month.

Saturday's survey comes on the heels of new measures in major cities. Beijing is raising the minimum down payment for second home buyers and those who have no home in Beijing but have housing loan records.

The latest tightening will curb some speculation and housing prices in some areas of Beijing may fall, Zhang said.

In a similar vein, the southern Chinese city of Guangzhou has also restricted house purchases through minimum down payments for second home buyers.