(Bloomberg) -- The downturn in China’s residential real estate sector slowed further in June, following the government’s efforts to put a floor under the housing market in some of its biggest cities. 

The value of new-home sales from the 100 biggest real estate companies dropped 17% from a year earlier to 439 billion yuan ($60 billion), compared with a 34% decline in May, according to preliminary data from China Real Estate Information Corp. Sales jumped 36% from May. 

Three of the nation’s biggest cities — Shanghai, Shenzhen and Guangzhou — slashed downpayments and allowed cheaper mortgages in late May, after the central government unveiled a broad real estate rescue package. The capital Beijing became the fourth of the so-called tier-1 cities to follow suit last week. 

The turn in the trajectory of new-home sales may offer some relief for China’s economy, which is on track to undershoot the government’s official 5% growth target for this year, Bloomberg Economics estimated last week. The property crash has hindered growth despite a flurry of support measures, even as other economic gauges including industrial production have steadied.

The Shanghai Stock Exchange Property Index, which tracks more than a dozen developers listed on the onshore bourse, rose as much as 4.7% on Monday. Hong Kong is closed for a holiday. China Vanke Co.’s Shenzhen-traded shares saw the biggest intraday upswing in six weeks, climbing as much as 5.8%.

Beijing’s loosening last week has spurred second-hand home sales. In the past weekend, sales of used residences gained about 18% by unit from a week earlier, according to estimates by Centaline Group analyst Zhang Dawei based on his channel checks. That brought the city’s June existing-home sales to the highest level in 15 months, Centaline data showed. 

Earlier easing in Shenzhen and Guangzhou boosted transactions in the southern cities, with average daily new-home units sold in the first 25 days of June up more than 30% from May, data from China Index Holdings showed. Shanghai saw sales rise 11%. 

Still, analysts remain skeptical that the support measures taken to date will halt a broader slide. Two credit ratings firms recently lowered their forecasts for China’s property market, with S&P Global Ratings’ onshore unit and Fitch Ratings now forecasting annual property sales to drop at least 15% from last year. 

“The new-home market is still searching for a bottom in the short term,” said Chen Wenjing, a researcher at property agency China Index Holdings. “Homebuyers’ outlook on their income hasn’t improved materially.” 

‘Open Mind’

Wall Street economists are predicting new measures and additional funding in Beijing’s bid to shore up the market, after top policymakers urged officials in a cabinet meeting last month to keep an “open mind” over policies to reduce housing inventory and be more “creative and bold” in rolling out supportive measures. 

Cash-strapped developers, many in default for more than a year, are counting on a sales revival to reassure debt holders and fight off liquidation. 

Last week, Kaisa Group Holdings Ltd. was given more time to work on its debt restructuring plan by a Hong Kong court, but was also warned this might be the company’s last chance. Dexin China Holdings Co. last month became the latest builder to be ordered to liquidate by a Hong Kong court.

Funding for developers has stayed weak since the government drew up a “white list” of property firms that are eligible for loans late last year. A broad gauge of financing for developers, including loans, bonds and proceeds from home sales, continued to shrink heavily in May, down 24% from a year earlier, the latest official data showed. 

--With assistance from Jeanny Yu and Tian Ying.

(Updates with estimate of Beijing existing-home sales in sixth paragraph)

©2024 Bloomberg L.P.