Growth in average new home prices on the mainland slowed last month to a near one-year low, official data showed yesterday, adding to concerns about the weakness of the property market and what policymakers can do if prices start to fall too sharply.
Average new home prices in 70 major cities rose 6.7 per cent from a year earlier, easing from March's 7.7 per cent increase, according to data released by the National Bureau of Statistics.
The challenge for the government is to ensure a cooling in the market does not turn into a more abrupt correction that would pose risks to the banking system and weigh on the economy.
In month-on-month terms, prices rose 0.1 per cent last month, slowing from March's rise of 0.2 per cent.
New home prices dropped in eight of the 70 cities from March, up from four cities in the previous month.
"The home prices in 70 major cities were generally stable and the gains were easing," Liu Jianwei, a senior statistician at the bureau, said in a statement accompanying the data.
Among 70 cities monitored by the bureau, only Wenzhou saw a 4.1 per cent annual drop in prices, the data showed.
The price data followed official figures last week that showed property investment, construction activities and sales slowed across the country.
Beijing has spent more than four years trying to tame rising home prices on concerns of an asset bubble and the measures started to take hold towards the end of last year.
Second-hand home prices dropped month on month in 22 cities, compared with 14 in March, data from the statistics bureau showed.
Prices in the capital Beijing rose 8.9 per cent from a year earlier, easing from March's year-on-year increase of 10.3 per cent, and marking the sixth month of slowing gains.
Shanghai's price gains eased to 11.5 per cent, compared with 13.1 per cent annual growth in March.
Analysts said the health of the property market would be an important factor in whether the economy suffers a shallow or deep downturn.
The slowdown in the property market helped pull down annual economic growth to an 18-month low of 7.4 per cent in the first quarter of this year.
Facing slack sales and high inventories, property developers have slowed their activities and some have started to cut prices to boost sales.
So far, widespread price cuts have not been seen and the data showed home prices in most cities still rising, albeit at a slower pace.