CHINA’S home sales tumbled in June, snapping a four-month rebound, suggesting the country’s vast property market is far from stabilising.

The value of new home sales by the 100 biggest real estate developers fell 28.1 per cent to 526.74 billion yuan (S$98.3 billion) from a year earlier, according to preliminary data from China Real Estate Information. That compares with a gain of 6.7 per cent in the previous month. Sales gained 8.5 per cent month-on-month.

A faltering housing market poses a risk to the economy, which is already under strain from weak consumer spending. Signs of weakness are emerging in the residential market after sales and prices rebounded briefly following a historical slump of about 18 months.

“Looking at daily sales data, I don’t feel the market is at bottom,” Rosealea Yao, a China property analyst at Gavekal Dragonomics, said at a briefing on Thursday (Jun 30). “The situation quite right now is pretty dangerous in my view,” she added.

A regular survey of depositors published on Friday found almost 17 per cent of people expected housing prices to fall in China next quarter, compared to 14.4 per cent in the survery conducted last quarter. About 16 per cent of people see home prices rising, down from 18.5 per cent last quarter, while 54.2 per cent see them being unchanged, basically the same as last quarter, according to the survey conducted by the central bank.

Existing-home prices resumed month-on-month declines in May, and could drop further as homeowners slash asking prices. Growth in new-home prices has abated, and real estate investment is deteriorating.

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Sluggish contract sales threaten to add renewed pressure on developers’ cash crunch. Earlier this week, two more Chinese developers failed to meet US dollar-bond payments, including Central China Real Estate Ltd. which received help from a government-owned entity in its home province of Henan.

Local government financing vehicles are boosting land purchases in China as the market weakens. LGFVs bought about 30 per cent of land sales in May, up from around 22 per cent in April, according to Huachuang Securities. That was the first month-on-month increase this year after the firms pulled back from buying earlier, the brokerage said in a report on Thursday. That may add to concern about the US$9 trillion debt the International Monetary Fund estimates LGFVs holds.

Investors have been expecting the government to issue more stimulus measures to support the real estate sector. But investors were left disappointed after Chinese banks cut their mortgage reference rate by less than some anticipated. BLOOMBERG