Property market expected to continue cooling trend

China's property market is expected to continue its downward trend as official figures show new home prices in dozens of major cities have dropped.

National Bureau of Statistics data for May shows that 35 cities saw month-on-month drops in new home prices last month, compared to just eight cities in April.

Only 15 cities saw month-on-month increases in May, substantially down from 44 in the month prior.

The average home price in the 70 cities surveyed slipped 0.15 percent from the previous month, marking the first drop in more than a year.

Prices in Hangzhou, east China's Zhejiang province, dropped the most, down by 1.4 percent.

Zhang Dawei, director of Beijing Zhongyuan Real Estate, says the downturn of the real estate market nationwide is inevitable.

"The property industry is accelerating the transition from the previous sellers' market to a buyers' market, including in first-tier cities like Beijing. Sufficient supply of primary property and other factors are affecting the market with great speculation. So I think the downturn of the property market is irreversible. The home price decline in 35 cities is just the beginning of such a trend."

The NBS data show the highest month-on-month price increase was 0.3 percent in the central Chinese city of Zhengzhou, while the price in Beijing increased 0.2 percent, faster than the growth-rate in April.

For existing homes, prices declined in 35 cities month-on-month in May, compared to 22 cities in April.

Zhang Dawei adds that home buyers are starting to take a wait-and-see attitude amid uncertain market prospects, prompting developers to slow down investing in and initiating new projects.

"Developers in both third and fourth, and in first and second tier cities as well, are facing great pressure from their property reserves. This will result in the drop of property prices to some extent. The transaction volume is also expected to decline after June if there is no supportive policy or other market incentives."

Real estate investment directly affects about 40 other business sectors in China, from steel and cement to furniture. It's a crucial driver of economic activity.