(Yicai) May 27 -- Lower-priced properties are powering pre-owned home sales in Beijing and Shanghai, underscoring tentative signs of a rebound in China’s top-tier real estate markets led largely by first-time buyers in search of cheaper units.

Secondhand home transactions in Beijing and Shanghai were up 15 percent and 29 percent, respectively, from a year earlier as of May 24, according to the China Index Academy. In Shanghai, 1,664 used home sales were registered on May 10 alone, setting a new five-year record high for single-day filings.

Properties priced below CNY3 million (USD442,000) made up 78 percent of pre-owned home sales in the capital city and 70 percent in Shanghai last month, according to data from property analyst Puri Real Estate. Since this month, the two markets have shown signs of rising volumes, falling listings, and more stable prices.

In April, Beijing recorded 18,000 used home sales, the most for the month in nearly five years, while Shanghai logged 29,000, remaining at a relatively high level compared with recent years. Shanghai also recorded over 1,000 daily transaction registrations on eight separate days last month.

The China Index Academy said pre-owned home sales in first-tier cities continue to concentrate in lower-priced units because previous price drops have brought some into the affordability range for first-time buyers. The improved affordability and value-for-money appeal encouraged some previously cautious buyers to enter the market. That had encouraged some buyers, who had been waiting on the sidelines, to enter the market.

At the same time, because these lower-priced homes have already fallen sharply, owners who sell them find that the down payment available for moving up to a better home is reduced, which weakens their incentive to upgrade. Under these conditions, some households with more than one property have become more inclined to sell to raise cash, resulting in a relatively smaller share of upgrade-oriented deals.

Huatai Securities said a weakening replacement chain was one factor behind falling home prices in major Chinese cities last year, particularly the gap between entry-level demand and demand for upgraded homes. Stronger turnover in lower-priced used homes this year has helped lay the groundwork for a pickup in the replacement market, but it remains unclear whether the recovery will extend to higher-priced properties, the brokerage said.

Editor: Emmi Laine