The latest figures on the mainland's property sector suggest that government austerity measures are having an increasing impact, with only two out of 70 cities recording price gains for newly built homes in December, the weakest performance of any month last year.
Figures released by the National Bureau of Statistics showed that prices fell month on month in 52 of the 70 cities reviewed, up from 49 in November.
Sixteen cities recorded no change in home prices last month, according to the bureau. Only two, Guiyang and Yinchuan, posted a slight month-on-month increase of 0.1 per cent each, compared with five cities in November.
'We expected these falls in flat prices on the mainland,' said Nicole Wong Yim, regional head of property research at the CLSA investment brokerage.
'There was a bigger supply in the second half of last year, especially after the credit tightening around August and September when people found it more difficult to get mortgage loans,' she said. 'As more developers started slashing prices, the downtrend in home prices has deepened and spread to more mainland cities.'
However, she said home loans on the mainland had been improving slightly from no growth in October to a positive gain in December. But it would take some time for banks to release money to the market and for the public to regain confidence.
She said she expected more cities to post price drops and to see steeper price falls in the next few months before the market stabilised as early as in April.
The bureau also revealed that prices of new homes in the four major cities, including Beijing, Shanghai, Shenzhen and Guangzhou, have dropped consecutively for three months.
Wenzhou, where some small private businesses have gone belly up because they could not repay maturing bank loans, posted the largest month-on-month drop of 1.9 per cent in December.
For the secondary home market, only three cities posted growth in prices last month, down from seven in November. Second-hand home prices dropped in 51 out of 70 cities, which is the same as in November.
The bureau on Tuesday announced that last year's residential flat sales in China recorded the slowest growth in three years, as it only climbed 10.2 per cent to 4.86 trillion yuan (HK$5.98 trillion) compared with 80 per cent growth in 2009 and a 14.4 per cent rise in 2010.