BEIJING -- China's real estate market continued to fall with widening price drops in February, leaving analysts to believe policy makers may move to bail out the ailing sector.
Of 70 large and medium-sized cities surveyed, 66 saw new home prices dip on a monthly basis in February, two more cities than in January, the National Bureau of Statistics (NBS) said on Wednesday.
For existing homes, 61 cities saw month-on-month price declines in February, the same number as in January. But cities reporting price increases dropped to five from six in January.
Along with weak prices, home sales volume decreased nearly 100,000 units in February from the previous month, according to the NBS.
"The week-long Spring Festival holiday mainly caused the anemic sales volume," said NBS senior statistician Liu Jianwei.
Analysts predicted the property market will rally slightly in March, because it is a traditional golden season for home purchases and the government may roll out measures to tune up the sector, which is critical to the Chinese economy struggling with slowing growth.
Premier Li Keqiang said on Sunday that he hoped to see "steady and sound development of the real estate market".
"We will encourage people to buy homes for their personal use or buy second homes," Li told a press conference at the conclusion of the annual parliamentary session, without elaborating on actions the government may take.
The 2015 government work report also said China will stabilize its property market, with tailored, market-based policies.
The tone was softer than previous reports, which had rhetoric like "curbing investment and speculative demand", fanning conjecture the country may further relax its property policies.
China's real estate sector began to see slumps in prices and sales volume last year, prompting authorities to loosen regulations previously put in place to rein in skyrocketing prices mainly fueled by speculative purchase.
Jessie Hsia, a researcher with Bank of Communications, says a continuing sluggish market dampens home developers' investment enthusiasm.
Property investment expansion slowed to 10.5 percent in 2014 from a 19.8-percent growth in 2013, denting demand for a wide range of commodities, including steel, cement and other construction materials.
Recent data indicates the home market is diverging: metropolises have shown signs of warming-up and lower-tier cities remain stagnant.
Although home sales volume in Beijing continued to dip on a yearly basis in Jan-Feb, the decline was slowing.
In February, new home prices in Shenzhen grew 0.2 percent month on month, and existing home prices in Shanghai and Shenzhen rose 0.1 and 0.3 percent, respectively.
The picture in smaller cities is still grim, mainly due to high inventory levels resulting from years of rampant investment in real estate, which was extremely lucrative.
In central China's Jiangxi Province, both home sales volume and revenue plummeted nearly 40 percent in the first two months of 2015. Provincial capital cities like Harbin and Taiyuan also reported slumps.
China cut benchmark interest rates twice over the last four months, but a property official in east China's Suzhou City said on condition of anonymity that lowered rates for personal mortgage loans proved not to be a strong incentive to encourage home buying.
The shrinking market is also an outcome of a property registration system and a proposed property taxation scheme.
Taking effect on March 1, the property registration system allowed Chinese authorities to collect home ownership information in a bid to strengthen protection of ownership and shed light on corrupt officials' illicit assets.
Real estate tycoon Pan Shiyi said the registration system will increase home supply on the market and drive down prices.
China is also mulling a property taxation scheme, which many analysts believe will add to the cost of holding assets and precipitate sale of homes bought for investment rather than for living.
But this year's government work report did not mention property tax or legislation on property tax, suggesting further delays.
China International Capital Corporation (CICC) predicted more policy easing, including fewer restrictions on property purchase and property transaction tax exemptions.
Bank of Communications said lowering down payment ratio for home buyers is another option for China.
Zhang Dawei, chief analyst with property information provider Centaline, expected sales volume to recover in the second and third quarter of the year if supportive measures are put in place.
"Future market performance highly depends on how the government will act," said Zhang.
