Renewed demand from first-time buyers set to propel home sales in smaller cities

Despite a month-on-month slump of housing prices in May for the first time in almost two years, some leading domestic developers remain optimistic that inelastic demand from first-time buyers will revive transactions in second- and third-tier cities.

He Miaoling, vice-president of Hong Kong-listed Evergrande Real Estate Group Ltd, said the property sector seems to have stabilized after some major shifts earlier this year, including the decline in May and the failure of some small developers.

"Transactions were robust in June, especially in second- and third-tier cities. We've gotten a boost in confidence about sales," He said.