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[SHANGHAI] Chinese home prices are believed to be in a trough and are thought likely to remain stagnant until June before picking up in the second half of the year once existing inventory has been sold, a Reuters poll found on Thursday.
The housing market is a key sector of China's economy but prices have slumped since early last year when the government took steps to cool a housing boom, which it quickly reversed, but the subsequent slump in house prices pulled 2014 economic growth to a 24-year low.
With builders now focussed on selling unsold property, market watchers hope the sector will end its downward spiral this year, especially after Beijing eased lending norms and relaxed home purchase restrictions.
The median forecast from a poll of 10 analysts taken March 20-25 showed average nationwide home prices are expected to remain flat until June, then pick up to 2 per cent for the second half of the year.
The forecast follows data last week showing average new home prices fell at the fastest pace on record in February from a year earlier.
"The key job is to digest the housing inventory, therefore I expect to see some signs of recovery in the second half of this year, lifted by the prices in first-tier cities," said Tian Shixin, analyst at BOCI.
Poll respondents were largely optimistic of a recovery in tier-1 cities such as Shanghai and Beijing, but remain cautious on the prospects for smaller centres.
Dalian, Qingdao, Changchun and Kunshan were listed as some of the cities which would face pressure on home prices this year.
While a majority of analysts expects Premier Li Keqiang's government to ease credit and lower interest rates and taxes, they said the ability of each town to attract migrants and cut inventory will decide whether home prices there rise or not.
"Most policy is expected to support the housing markets in smaller cities to avoid too many people from migrating to larger cities," said Wu Jun, researcher at Jingwen Real Estate.
Poll respondents rated China's house prices a 7 on a scale of 1 to 10, where 1 is extremely undervalued and 10 is extremely overvalued.