(Yicai  Global) March 13 -- The property market in China's southern city of  Shenzhen has shown some signs of recovery with a 20-month-long slowdown  in prices subsiding at the start of the year. Major local banks have  eased mortgage rates starting from last weekend, which may bring new  stimulus for the traditional boom season that takes place in April and  May. 

The  average price of new residential property in Shenzhen, which has seen  falls for over 20 months in a row, started to increase in January,  rising CNY52 (USD7.7) per square meter from December. The figure booked  another gain of CNY120 (USD17.9) last month, data from real estate  broker Centaline Property Agency shows. The average price for  second-hand property also started to stabilize and recover, saying  goodbye to the falls which had lasted six consecutive months. 

Property sales are also improving slowly, Yicai Global noted on a recent visit to offices in the city. 

Not  many houses are available for purchase after one developer sold nearly  100 units last week though the location is relatively remote and  supporting facilities are also not well-equipped, a representative of  Huaqiang Urban Garden told Yicai Global. "Only a few large-sized  apartments are available for purchase now," he added.

Sales  of property at City of Stars, another project located in the same  district, are also coming to an end. The developer introduced over 3,000  houses at the year-end, now less than 1,000 are available. "We can sell  about 10 each weekday, and over 30 are sold each day on weekends, the  project's sales personnel said. 

The  company behind the project cannot hike prices due to policies though  they are finished apartments and most discounts offered by the developer  are related to decoration fees, he said, adding that the developer  would adjust incentives from March 13, as well as canceling other  discounts. 

Generally  speaking, multiple real estate projects in Shenzhen have been adjusting  promotional efforts since January, with some canceled or lowered, the  head of marketing at a developer told Yicai Global. Developers'  liquidity is better than before as the government has somewhat eased  policies, he added. 

Just  like home buyers, developers are also on the sidelines, he continued.  They will price the houses based on market conditions and are not  hurrying to start new projects. 

Banks Ease Mortgage Rates

Shenzhen  banks have also started to lower mortgage rates, which has helped the  recovery of the market. Major local lenders including branches of the  country' s big four commercial banks and China Merchants Bank are also  getting involved. 

The  mortgage rate for first-time buyers in Shenzhen is basically only 5  percent higher than the central bank's benchmark loan rate currently,  compared with 10 percent before, while the mortgage rate for second-time  buyers is also just 10 percent higher than the central bank's benchmark  loan rate. The two figures need to be 15 percent and 20 percent higher  than the central bank's benchmark rate from mid-2018, respectively. 

On-site managers have not noticed a significant increase in visitors after the rate adjustment, Yicai Global found. 

The  market conditions for easing the mortgage rates are quite important,  said Xiao Xiaoping, head of Lianjia-backed Shenzhen Beike Research  Institute. "If the market itself is sluggish, a cut in interest rate may  not matter much but the rate factor will make house buyers feel more  urgent as the timing is subtle."

Stability  is still the core of current real estate policy, believes Zhang Yu,  research director at CCIG Real-Estate. Therefore, the range of rate  adjustment will be quite limited, no matter if it's a hike or a cut, he  added. 

Editor: William Clegg