On Wednesday, official statistics revealed lower falls in home sales, developer investment, and construction starts in January-February, helping China’s property market recover from a months-long slump.

The National Bureau of Statistics (NBS) reported a 3.6% drop in home sales by floor area in the first two months of 2023 compared to a 24% drop in 2022.

The narrower sales decrease followed a rise in new home prices in January, the first increase in a year, as buyers, while still cautious, sought solace in supporting policies, hopes of more stimulus, and China’s escape from its crushing zero-COVID regime.

Developer property investment declined 5.7% in January-February, up from December’s 12% drop and 2022’s 10% drop.

Experts expect property sales to be the first positive indicator and property investment to return in the second half of 2023.

“The results are a strong start to the property market recovery for 2023 and will further improve confidence,” said Yan Yuejin, an analyst at the E-house China Research and Development Institution in Shanghai.

“The biggest evidence that the property market is improving is that property sales data are likely to turn positive in the first quarter.”

Since mid-2021, several problems, including developers’ loan defaults and stopped pre-sold home project building, have destroyed sentiment for China’s property sector, a key economic driver.

According to Zhixin Investment Research Institute analyst Ma Hong, eliminating COVID-19 limits and releasing cash to developers for pre-sold project delivery will enhance demand.

“Investment by developers, a crucial indicator of market performance, would certainly climb in the second half of the year,” Ma said.

New construction starts by floor area declined 9.4% from a year earlier in January-February, compared to 44% in December and 39% in 2022.

Developers can now get money. Developer funds fell 15% in the first two months of 2023, compared to 26% last year.

“Real estate enterprises face a peak period of debt payback in the first half of the year,” said Zhixin’s Ma.

Half of Hong Kong’s 30-odd Chinese developers have missed bond payments.

The government prioritized protecting prominent property developers at the start of China’s parliament’s annual meeting this month, but it also said it would restrict uncontrolled expansion by developers.