While China's housing market has shown tentative recovery signals, a sustained rebound still hinges on continued policy easing, analysts and policy advisers said, with further scope remaining for interest rate reductions and purchase restriction removals.

Their comments come as the sector is closely watching policymakers' property market policy stances, as improving property market data have reignited debate over whether China's five-year-long housing market correction is approaching a turning point.

Zhang Yu, managing director and chief real estate analyst at China International Capital Corp, said the recent pickup in home sales in Beijing and Shanghai reflects improving supply-demand dynamics.

"In Beijing and Shanghai, listings in the existing home market have begun to decline while transaction volumes have stabilized, suggesting a shortening absorption cycle — a key indicator of how quickly available housing inventory can be cleared — and offering positive signals of market stabilization," Zhang said.

The National Bureau of Statistics said secondhand home prices in China's first-tier cities — Beijing and Shanghai, as well as Guangzhou and Shenzhen in Guangdong province — climbed 0.4 percent in March on a monthly basis, reversing a 0.1 percent decline in February.

In Beijing, secondhand home prices rose 0.6 percent in March, while Shanghai saw a 0.4 percent increase. Home prices and transaction volumes in these two cities are closely followed by market observers as a barometer of the broader property market.

Most of the transactions were concentrated in homes priced below 3 million yuan ($438,876), Zhang said, indicating demand remains heavily skewed toward first-time buyers, cautioning that without stronger participation from buyers who need to improve their homes, the recovery could lack sustainability.

Both improvements in macroeconomic conditions and the continuity of property market policy support are essential to stimulate upgrade demand and extend the nascent property market recovery into more cities, he said, and suggested further easing home purchase restrictions, lowering mortgage rates, facilitating mortgage transfers between buyers and sellers, and offering tax deductions tied to housing consumption.

Zhang also emphasized the need to develop institution-led rental housing and lower thresholds for real estate investment trusts to facilitate a meaningful expansion in REIT issuances to support rental housing.

Zhang Bin, a nonresident senior research fellow at the China Finance 40 Forum, said further stabilizing the property sector not only requires sector-specific policies, but also broader efforts to address insufficient domestic demand and foster a recovery in inflation.

Property valuations can be deemed as the discounted value of future rental incomes, said Zhang, who is also deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences and a national political adviser.

Therefore, a key policy lever to stabilize property prices would be further interest rate cuts, Zhang said, as they would help lift inflation expectations, support rental outlooks and — by lowering discount rates and improving risk appetite — bolster property valuations.

Pan Gongsheng, governor of the People's Bank of China, the country's central bank, said last month that it will flexibly and effectively employ a range of policy instruments, including interest rate cuts, to promote steady economic growth and a reasonable recovery in overall price levels.

zhoulanxv@chinadaily.com.cn