(Yicai Global) March 31 -- Large Chinese cities' housing markets are recovering this month from last month while smaller cities are predicted to follow suit.

In first-tier cities, housing transactions based on floor area expanded 12 percent in March from a month earlier, according to statistics from the China Index Academy. In second-tier cities, the increase was 32 percent. But when compared to last March, the declines were accelerating.

Property sales are still sluggish in smaller cities. Third-tier cities logged a 10 percent decline in housing transactions in March from February.

The gap between big and small cities may narrow. Regional governments are easing their property regulations while cities that rank second-tier or below are lowering their mortgage rates to stimulate growth.

A rebound could affect the whole market. Market participants predict that China's real estate sales should pick up amid the relaxing regulatory environment while easier access to borrowing should improve homebuyer confidence.
Three first-tier cities logged major increases in deals this month. Housing transactions jumped by more than 80 percent in Beijing from February. Those of Guangzhou rose by 34 percent and Shenzhen's tally climbed 26 percent. However, Shanghai's number declined amid the city's new Covid-19 outbreaks.

Transaction volumes and prices in popular Beijing neighborhoods significantly exceeded the base of last year and the levels seen before the Covid-19 pandemic, a real estate agent in the city's Haidian district said to Yicai Global.

Another property agent in Beijing's Tongzhou district said the branch's volume of transactions surged about 60 percent in March from a month earlier.

The Tongzhou agent gave an example. Similar apartment units in the area was priced below CNY4 million (USD630,000) before the Spring Festival in January but has now risen to around CNY4.1 million.
Borrowing has become quicker. Banks in Beijing have accelerated their home loan issuance even though the mortgage rates are unchanged, several lenders said to Yicai Global. Applicants can receive the loan as quickly as three weeks, they added.

A credit manager at the Beijing branch of Industrial and Commercial Bank of China said that the bank's mortgage quota is sufficient and homebuyers no longer need to wait in line.

Based on data from 103 key cities, the average mortgage rate for first-time homebuyers dropped 13 basis points in March from February, according to Beike Research Institute. Meanwhile, that of second-time buyers fell by 15 basis points, marking the largest single-month drop since 2019.

Western China's Chengdu ranked No. 1 in this regard as first-time homebuyers in the city could see rate cuts of 69 basis points, the highest reduction among all the 100-plus cities. In the capital of Sichuan province, the second-time buyer mortgage rate was lowered by 34 basis points.

Editors: Tang Shihua, Emmi Laine, Xiao Yi