(Yicai) May 7 -- Xi’an, home of the world-famous Terracotta Army, is proving to be an outlier in China’s property market slump as new home prices have risen for over a year amid a wave of residents seeking better properties to live in.

New-build prices in the capital of Shaanxi province rose 0.4 percent in March from February, climbing for the 13th straight month, according to the latest figures compiled by China’s statistics bureau. The increase was second only to Shanghai, while just 11 cities among the 70 monitored nationally clocked up gains.

Higher demand, driven by people wishing to improve their living conditions, is a significant contributor to the rise in average selling prices in Xi’an, said Shi Rui, general manager of the local branch of the China Index Academy.

Newly built homes with living spaces ranging from 120 to 160 square meters have became the main driving force behind transactions since late last year, leading to the unusual phenomenon of elevated prices stoking higher demand.

Huge Buyer Interest

Xi’an is attractive to people coming from other regions and the local housing market was among the first to pick up along with the gradual economic recovery, a leading developer’s head of business in Shaanxi told Yicai.

“The constant surge in selling prices of Xi’an’s new properties is mainly spurred by the increasing share of high-quality properties among houses that are currently available on the market,” noted Wang Xiaoqiang, chief analyst at the Zhuge Real Estate Data Research Center.

Twenty new residential projects with nearly 12,500 apartments in the city started sales in the first three months of this year, up 15 percent from a year ago, according to the China Index Academy’s local branch. Eleven of them attracted overwhelming interest from potential buyers.

The strong demand has powered sales at builders and also spurred their enthusiasm for securing the rights to develop land. In the first three months of this year, combined sales at the top 10 builders surpassed CNY26.7 billion (USD3.7 billion), up from CNY23.8 billion a year ago, based on CIA data. Xi’an earned about CNY25.5 billion from selling land use rights, the third-most after Beijing and Hangzhou.

Declining Pre-Owned Housing Market

However, the progress made by the market for new builds in Xi’an has not yet spread to the city’s second-hand housing market, which are becoming more affordable.

Nearly 9,620 pre-owned homes exchanged hands in March, according to the municipal bureau of housing and urban-rural development. That involved 943,100 sqm of floor space, the third-most ever. But prices slipped 0.3 percent from February and slid 4.2 percent from a year ago.

Xi’an’s pre-owned housing market has shrunk in most months over the past year, according to the CIA. Such properties tend to better reflect local pricing trends, Zhuge’s Wang said, adding that this is why it is unclear whether the strong performance of new homes can be sustained.

Editors: Tang Shihua, Emmi Laine