CHINA’S home price declines eased slightly in February, after authorities stepped up efforts to salvage the beleaguered market.

New-home prices in 70 cities, excluding state-subsidised housing, fell 0.36 per cent last month from January, when they retreated 0.37 per cent, National Bureau of Statistics figures showed on Friday (Mar 15). The second-hand market also improved, with the drop narrowing to 0.62 per cent from 0.68 per cent.

Arresting the slump in values is key to reviving homebuyer demand, as plunging sales deprive developers of much-needed cash to repay debts. The liquidity crisis has reached another low as state-backed China Vanke, the country’s second-largest developer by sales, fights to avoid its first-ever default.

Chinese authorities have been stepping up support for the housing market by urging banks to provide financing for developers and allowing local governments to ease rules for homebuyers. That has yet to revive new-home sales, which slumped 60 per cent last month from a year earlier, private data showed.

The nation’s housing minister said last week that China still faces a “severe task” to stabilise the market, acknowledging the current difficulty is related to issues with capital. Country Garden Holdings was recently confronted with a liquidation petition in Hong Kong, while China Evergrande Group was ordered to wind up in January.

Policymakers have increased pressure on banks to boost their property loans through so-called white lists, as developers struggle to complete projects. As at end-February, state-owned lenders had approved more than 200 billion yuan (S$38 billion) of bank loans for property works eligible for support, a jump from just a week ago.

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In another blow to developers, homebuyers have been shifting to the second-hand market due to falling prices and doubts over the timeline for the delivery of new apartments. Existing home sales overtook new properties by area for the first time last year.

Market watchers caution that a sustainable sales rebound hinges on stronger policies. Now that the central government has given local officials ample autonomy, they should “bear the responsibility” to tweak rules to stabilise the market, housing minister Ni Hong said last week.

Some tier-2 cities have started to fully remove home-buying restrictions, raising expectations for more large cities to follow suit. Hangzhou no longer reviews buyers’ eligibility when they purchase pre-owned homes, state media reported this week. BLOOMBERG