OREANDA-NEWS. March 19, 2015. China's average new home prices fell at the fastest pace on record in February from a year earlier, hurt by slower sales during the Lunar New Year holidays, but developers and analysts expected prices to slowly recover - particularly in top-tier cities.

Average new home prices in China's 70 major cities dropped 5.7 percent last month from a year ago, the sixth consecutive fall, following January's 5.1 percent decline.

It was the biggest annual fall in the nationwide survey which has been compiled since 2011. The monthly fall in February from January was 0.4 percent, the same as in the previous month.

The record fall coincided with news that Chinese banks have extended Evergrande Real Estate Group 100 billion yuan (\\$16 billion) in credit, as the slump in China's key real estate sector extends to one of China's biggest and most indebted property developers.

Real estate stocks jumped in response to the price news, with the Bank of Communications expecting the government will take measures to bolster the market, including lowering taxes and loosening requirements for mortgage lending.

"Over the weekend, Premier Li Keqiang vowed to support the economy if it continues to slide, so the worse the economic data, the sooner stimulus policies will be rolled out," said Luo Wenbo, analyst at Qilu Securities.

"Investors wouldn't have been so bold if the Premier hadn't made that promise."

The National Bureau of Statistics (NBS) data showed new home prices in Beijing fell 0.2 percent between February and January, accelerating from a 0.1 percent fall in January from December, while Shanghai prices fell again by 0.1 percent after stabilising following eight straight month-on-month falls.

Westpac Global Economics said in a report that home price consolidation was limited to tier 1 markets.

"Outside the wealthier coastal cities, the process of clearing excess inventory requires further discounting at the new end, and lower asking prices in secondary markets."

"In short, there are further signs of a bottoming in the tier 1 cities, while the rest of the country continues to struggle," it said.

Of the 70 major cities the NBS monitors, 66 posted a monthly decline, up from January's 64.