Growth came from an already high base in March, when developers reported a sharp uptick in sales following the Chinese new year holiday. Significantly, this is the first time that the index has stayed above 60 for two consecutive months since China Confidential began its survey in December 2012.

The uptick appears to be a response to Beijing’s decision to relax mortgage requirements for second-time buyers. The People’s Bank of China (PBoC) said at the end of March that down payments for home buyers with an existing mortgage would be lowered from 60 per cent to 40 per cent of the purchase price. Of the developers responding to China Confidential’s survey, 43 per cent said that customers were able to secure a mortgage with a down payment of 40 to 50 per cent in April, compared with an average of just 8 per cent since the survey began. After the relaxation of the 60 per cent rule, 44 per cent of developers said customers seeking to upgrade their homes were their biggest source of demand in April, the largest proportion in the history of the survey.

While upgrader demand has picked up, property speculation remains muted, in keeping with Beijing’s wish to avoid a repeat of previous bouts of overheating in the housing market: just 17 per cent of developers said their biggest source of sales was from customers wanting to purchase an additional home. A separate survey of urban consumers by China Confidential shows an increasingly positive attitude towards purchasing a house for self-occupancy, while attitudes towards buying property for investment are still negative. The China Confidential Property Investment Sentiment Index was 42.9 in April (a reading below 50 indicates negative sentiment), while the China Confidential House Buying Sentiment Index rose to 53.4.

And while banks are willing to accept smaller down payments by their borrowers, interest rates remain relatively high. Of the developers surveyed by China Confidential, 81 per cent said second-time buyers had to pay above the benchmark lending rate in April. Nor was there any sign that mortgage rates are being significantly lowered for first-time buyers, something the PBoC has repeatedly tried to encourage commercial banks to do. Although just 7 per cent of developers said first-time buyers had to pay above the benchmark lending rate for a mortgage in April, only 19 per cent said their customers were able to secure a mortgage for less than the benchmark rate. That compares with 50 per cent who said their customers were getting rates below the benchmark at the beginning of 2013.

Seemingly, banks are not entirely playing ball with Beijing’s attempts to rally the housing market; mortgage lending is a fairly unprofitable area of business for them. The previous policy-led upswing in home sales at the end of 2014 quickly fizzled out due to still-tight credit conditions for homebuyers and, despite the positive signs in recent months, China Confidential’s survey data suggest the same could well happen this time around.