BEIJING (BLOOMBERG) - China’s housing slowdown deepened last month, with new home sales falling the most since the downturn began in July as the country’s latest Covid-19 outbreak took hold. 

Sales by value dropped 29 per cent in March from a year earlier, according to Bloomberg calculations based on year-to-date figures released on Monday (April 18) by the National Bureau of Statistics.

Real estate development investment resumed falling with a 2.4 per cent drop after a brief expansion in the first two months. 

The decline is another blow to the embattled property sector, which has been hit by a cash crunch among developers that has disrupted construction, shattered home buyer confidence and led to a wave of debt defaults.  China’s government last month pledged to prevent a “disorderly collapse” in the sector, which makes up about a quarter of gross domestic product. 

Government figures released on Monday showed that economic growth picked up in the first quarter despite the housing slowdown and weak consumption. 

The March home sales figures do not show the full impact of Covid-19 lockdowns in Shanghai and some parts of the southern metropolis of Guangzhou that have kept potential buyers away. Last week, several other places, including Suzhou and parts of Zhengzhou, also imposed tighter controls to combat infections. 

“Subdued home sales force developers to restrain spending from land buying to construction,” said Beike Research Institute property analyst Pan Hao. “The March data shows entire activities in the sector have slowed.” 

The Covid-19 outbreak started to hit the residential market in the second half of the month, hindering a recovery after more policy support measures were rolled out, Beike Research analysts wrote in a report last week. About 20 cities have seen a substantial impact on new home sales since then, they said. 

The decline in property transactions may ease following steps by the local authorities to loosen restrictions on purchases, statistics bureau spokesman Fu Linghui said at a briefing on Monday. 

More than 60 municipalities loosened regulations on home buying in the first quarter, including four provincial capitals that abandoned restrictions on ownership and resales. 

Others are less optimistic that such efforts will spur demand. 

“Weak home buyer confidence remains a key hurdle,” Bloomberg Intelligence analyst Kristy Hung wrote in a note on Monday. “Covid-19’s spread adds additional near-term threats.”