* Jan new home prices +0.2 pct m/m
* Yearly growth +12.2 pct y/y
* Shenzhen, Shanghai monthly growth slowed
* Beijing prices stayed flat from Dec (Adds quotes, background, policy context)
BEIJING, Feb 22 (Reuters) - China's home price growth slowed for the fourth straight month as demand cooled further in its biggest cities, a welcome sign for policymakers as they seek to defuse bubbles in the world's second-largest economy amid an explosive growth in debt.
Over the past year, authorities have slapped curbs on China's property sector - a major contributor to the broader economy - as the concentration of price surges in the country's wealthiest cities stoked fears of a nasty crash.
The January data released by the National Bureau of Statistics (NBS) suggests regulators are making steady progress in keeping the riskier speculative investors off the property market, with average new home prices in China's 70 major cities up 0.2 percent month-on-month, slowing a touch from December's 0.3 percent rise.
That marked the fourth month of slowing monthly growth, with analysts expecting further falls in the year ahead.
"I think home prices have basically peaked. Considering the yearly growth is still strong, prices are likely to keep falling this year," said Zhou Hao, a Singapore-based economist at Commerzbank.
Compared with a year ago, home prices still rose 12.2 percent, just off December's 12.4 percent gain.
In China's biggest cities, Shenzhen, Shanghai and Beijing prices rose 18.2 percent, 23.8 percent and 24.7 percent, respectively, from a year earlier, but Shanghai and Shenzhen's monthly pace slowed as local governments' tightening measures knocked demand.
All the same, a more subdued housing market may mean China will be even more reliant on infrastructure spending to boost economic growth.
That may pose challenges as a closer look at China's only shrinking provincial economy reveals increasingly diminishing returns from such a state-driven policy highly reliant on borrowing.
DEBT RISKS
Indeed, China appetite for cheap credit has fed an explosive growth in debt over recent year, prompting a warning from analysts and the likes of the International Monetary Fund of a banking crisis that could ripple across the global economy.
China's debt to GDP ratio rose to 277 percent at the end of 2016, from 254 percent the previous year, UBS analysts said in a recent note.
Moreover, some analysts caution that downward home prices are likely to have a negative impact on producer prices, which is at near six-year highs thanks to record prices in raw materials, affecting firms' ability to service their mounting debt.