The average price of new homes in 70 Chinese cities continued to fall for the sixth straight month in October, but at a slower pace as some home buyers returned to the market following Beijing's move to loosen mortgage rules.
The policy moves, however, have had a limited effect on buoying a sluggish market that is marked by looming inventories, and property developers remain under pressure to cut prices to attract home buyers.
On a month-over-month basis, prices in October slipped 0.8 per cent compared with a 1.0 per cent fall in September, according to calculations by The Wall Street Journal. This is the second consecutive month that the average price drop has moderated.
On a year-over-year basis, the average price of new homes declined by 2.5 per cent in October compared with a 1.1 per cent fall in September, which was the first annual decline in nearly two years.
Many investors are concerned that a prolonged slump in the property market could continue to drag growth in the world's second largest economy. Analysts estimate that real estate accounts for nearly one-quarter of gross domestic product, factoring in construction, cement, steel, chemicals, furniture and other related industries.
Excluding public housing, private-sector home prices fell in 67 of the 70 cities in October from a year earlier, up from the 58 cities that posted declines in September. On a month-over-month basis, home prices fell in 69 of the 70 cities in October, unchanged from September.
The authorities have recently introduced measures to prop up the housing market. The central bank and banking regulator in late September loosened mortgage restrictions by extending qualification for first-time buyers' preferential rates and terms to existing homeowners.
Housing sales in October showed a smaller year-over-year decline compared with September, as more favorable mortgage terms boosted home-buying sentiment. But some analysts warned that those measures won't quickly solve the longer-term issues of excess inventory and rising leverage, and noted that some developers would do well to continue to cut prices to pare down their holdings.