The mainland property market will keep testing for a bottom in the next few months despite the loosening of home purchase restrictions by more than two dozen citiies in recent weeks, industry analysts said.
Hot weather, rain and storms were adding to the summer downturn, they said, although sentiment could gradually recover as a result of the incremental relaxation of policy.
As of July 23, 26 cities had reportedly eased home purchase restrictions, out of 46 that had imposed such controls since 2010, consultancy Centaline China said.
However, only a few cities, including Hohhot in Inner Mongolia and Jinan in Shandong province, have confirmed the relaxation publicly.
Most avoided publicity for the easing.
"For the relaxation to work, it needs good timing," Chen Xiaotian, chief researcher at Shanghai-based consultancy E&H Corp, told the South China Morning Post.
"Right now, it will only bring more lookers, as the market has not bottomed out yet."
Chen said his checks with major developers on Monday indicated no signs of a recovery, as sales this month remained largely at the levels in June.
"Developers and homebuyers are still testing for a bottom to prices," he said.
"The market will not turn better until the fourth quarter."
A survey of 23 mainland cities by Centaline China found that the average home price was only 6.3 per cent lower in June than at the beginning of the year.
Centaline estimated that a discount of 15.3 per cent was needed to stimulate sales to any satisfactory level.
It suggested the best option for developers to revive their sales would be to deepen price cuts.
The mainland's tough home purchase restrictions are aimed at curbing speculation and easing housing inflation.
The property market tightening campaign in the past decade has reduced the proportion of investors among homebuyers to roughly 10 per cent now from almost 50 per cent in 2007.
These buyers will be unlikely to enter the market now, with prices still falling, analysts said.
The central bank's latest quarterly survey showed property was the third most popular investment, after mutual funds/wealth management products and bonds.
It found that 14.4 per cent of the 20,000 household respondents across 50 major cities planned to buy a home this quarter, down from 15 per cent in the previous survey.
Despite a call by the People's Bank of China for speedier and cheaper mortgage loans to support buyers of first homes, commercial lenders extended 938.9 billion yuan (HK$1.18 trillion) in new mortgage loans in the first half, 23.9 billion yuan less than in the same period last year.
The latest developments in the market vindicate predictions made by Macquarie analysts led by David Ng.
After a recent trip to Ningbo in Zhejiang province, one of the cities worst hit by the cooling of the property market, and observing zero traffic in many property sales offices, they predicted earlier this month that "the physical market will deteriorate further in July and August while policy relaxation should intensify to even touching the domain of stimulation, especially for the lower-tier cities".