(Yicai Global) April 6 -- The relaxation of controls on buying residential property in Chinese cities in the first quarter is likely to start having a positive impact on the real estate market from the middle of the year, according to those in the know.

The eased controls are expected to play a role in promoting sales and supporting fundraising by developers, with the credit situation improving significantly, industry insiders said.

More than 60 cities eased controls in the first three months of 2022, including lowering mortgage rates, stipulating smaller down payments, and loosening sales restrictions, according to real estate research institute China Index Academy.

The easing of restrictions was prompted by an ongoing slump in property transactions, especially in third- and fourth-tier cities.

The destocking cycle of 66 third- and fourth-tier cities monitored by real estate agency Shanghai CRIC Information Technology hit 23.3 months in February, an increase of more than 80 percent from a year earlier. Among second-tier cities, seven -- including Harbin, Changchun, Qingdao, and Zhengzhou -- have a more than two-year cycle, with Harbin’s rate more than double that of the previous year.

The eased controls will take time to work their way through to transactions, according to the industry insiders. CRIC’s research showed that sales and investment will remain limited across the country this quarter, and it will take much time for the relaxed rules to boost market confidence.

The pandemic has had a huge impact on credit, and the continuous slump in real estate sales hit mortgage provision in March, said Liao Zhiming, chief banking analyst of China Merchants Securities. Credit to the sector will improve significantly in the middle of the year, he added.

Market watchers tend to believe that with the bottom of market curbs gradually coming into view, city-based regulations will be important to boost real estate sales and fundraising.

Editor: Peter Thomas