Home prices on the mainland rose more slowly from a year earlier for a fifth consecutive month last month, official data showed on Wednesday.
The figures add to concerns that a deeper-than-expected property downturn could take a severe toll on the wider economy.
Analysts expect developers to cut prices further in the next few months and that property sales may then pick up in the second half of the year.
Annual housing price inflation eased in 66 of the 70 cities tracked by the statistics agency, down from 67 in April. The quickest pace of increase slowed to 11.3 per cent from April’s 13.6 per cent.
In month-on-month terms, new home prices declined in half of the cities last month, compared with only eight in April.
Among the 15 cities where prices still rose from a month earlier, six experienced a moderation in the pace.
“Home prices fell in some cities, because they faced high inventory pressure and an uncertain market outlook recently,” National Bureau of Statistics senior statistician Liu Jianwei said in a statement interpreting the latest data.
“Homebuyers are taking a wait-and-see attitude, and some developers have had to offer discounts.”
The home price data followed recent figures that showed improving yet still soft property sales and construction activity.
China’s leaders have taken a slew of incremental steps in the past few months to rev up economic growth, including efforts to unleash cash previously locked up at the central bank, accelerated disbursements of fiscal expenditure and faster approval of infrastructure projects.
On the local level, a few cities, including Hangzhou in Zhejiang province and Wuxi in Jiangsu province, have relaxed rules to stimulate housing demand and help ease the cash strains of developers.
In the light of these policy moves, Edison Bian, research head for China property at UOB Kay Hian, said: “We expect gradual home sales recovery in the second half.”
But Wang Tao, chief China economist at UBS, singled out the downturn in the property sector as the biggest risk to the world’s second-largest economy in the next two years.
“We see a 15 per cent probability of a sharp property downturn pulling GDP growth down to 5 per cent-plus in 2015,” she said in a research note on Tuesday.