Property price decline spreading

But there may be a rebound in 4th quarter as buildup in supply eases

More cities in China saw property prices decline last month on an annual basis, but rebounding sales could push up prices in the coming months, analysts said.

Out of 70 major cities tracked by the government, 46 recorded a year-on-year price fall in April, eight more than in March, the National Bureau of Statistics said on Friday.

Month-on-month, 43 cities recorded a price fall, while 24 remained flat. In March, 46 cities posted a price decline from the previous month.

Nicole Wong, regional head of property research at CLSA Research Ltd, said there may be a small fourth-quarter rebound in property prices after a buildup in supply starts to gradually ease.

"We expect the property price to increase 5 percent in the fourth quarter, after a flat second and third quarter," said Wong.

"As both first-home buyers and property developers find it easier to get bank loans, we expect property sales will pick up," said Wong.

Zhang Xiaohong, a senior official with the Ministry of Housing and Urban-rural Development, said that a correction in real estate market will continue in the coming months.

China began taking steps to curb property prices in 2010. These included tighter lending policies, higher down payments, a ban on third-home purchases, property tax pilot plans and the construction of more low-income housing.

Government officials have repeatedly stated that the curbs will stay in place, even after economic growth slowed to a near three-year low of 8.1 percent in the first quarter.

Though the government won't ease the current curbs, it will be hard to add new ones, said Liu Feiguo, vice-president of E-Commercial China, a leading commercial property service provider.

The April home price data fueled concerns that a cooling property market will accelerate China's economic slowdown, as property development investment accounts for more than 10 percent of the country's GDP and affects many other industries.

These concerns dragged the benchmark Shanghai Composite Index down 1.44 percent to 2,344.52 points on Friday.

The State Information Center, a government think tank, said the property curbs, combined with sluggish external demand, will further weigh on the economy in the second quarter.

It forecast that GDP growth will slow further in the current quarter to 7.5 percent.

However, because of a sound employment situation, it is unnecessary to worry too much about the economic slowdown, the center said.

The People's Bank of China has cut banks' reserve requirement ratio by 0.5 percentage point to spur lending and stabilize growth.

The central bank lowered the RRR in November and again in February.

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