By ESTHER FUNG
SHANGHAI—Property prices in 70 Chinese cities in a government survey fell in December from the previous month, marking the third straight decline after developers cut prices to boost sales amid Beijing's campaign to cool the property market.
Prices still rose compared with a year earlier, though at a slower rate than in November.
Property developers are becoming more cautious and expect further price falls this year as the government has indicated it doesn't plan to relax its tight grip on credit and home purchases.
"The government is determined to have prices fall in this tightening cycle, even though 'stabilizing prices' is the phrase most frequently used," said Oscar Choi, an analyst at Citigroup. "The officials we spoke to are wary that the kind of housing bubble that appeared in Japan and Spain could occur here, and want money to flow back into the real economy."
However, as a slowdown in the economy increases concerns about a hard landing in the sector, some analysts expect the government to signal a policy shift later this year, to ensure stability when the next leaders of the Chinese Communist Party are promoted in the fall.
"At the National People's Congress meetings in March, local officials will be lobbying aggressively for relief. Once prices have come down, we expect Beijing to start gradually easing some of the property-market restrictions imposed in the past year in order to encourage first-time buyers into the market," Standard Chartered economists said in a note.
The National Bureau of Statistics said Wednesday that average prices of newly built homes in 52 of 70 large and medium-size Chinese cities it surveyed fell in December on a sequential basis, up from 49 cities in November.
On a year-to-year basis, prices of such homes fell in nine of the 70 cities in December, up from four cities in November.
Prices of newly built homes in major cities such as Beijing, Shanghai, Shenzhen and Guangzhou were marginally lower compared with November, the statistics bureau's statement said.
Wenzhou, a coastal city known for wealthy entrepreneurs and property speculation that was hit by a credit crunch last year, posted the largest sequential and annual slide in December, with prices falling 1.9% from a month earlier and 6.9% from a year earlier.
Based on Dow Jones Newswires' calculations, prices in the 70 cities covered by the city decreased by 0.22% on average in December from a month earlier, compared with a 0.17% decrease in November and a 0.13% increase in October. Prices rose 1.6% on average in December from a year earlier, moderating from a 2.3% increase in November.
Evergrande Real Estate Group Ltd. said Monday it is targeting contracted sales of 80 billion yuan ($12.67 billion) this year, a more conservative target compared with previous years, after taking into account the state of the broader economy.
Hit by tightened credit channels and administrative curbs on home purchases, growth in property construction starts, investment and sales in China slowed in 2011. The slowdown in the sector has also hurt local governments, which rely on land sales for revenue.
Separately, foreign direct investment into China fell for the second straight month in December, in a possible sign of weakening sentiment toward the Chinese economy, though the full-year figure still showed gains.
Actual foreign direct investment in December slid 12.7% from a year earlier to $12.2 billion, the Ministry of Commerce said, compared with a 9.8% drop year-to-year in November. The November drop was the first year-to-year decline since March 2010.
Sluggish economic growth in the U.S. and euro-zone debt problems have been factors holding back the investment appetite of Western companies.
Concern over China's own growth prospects was another possible factor behind the drop in FDI in the final months of last year.
For the 2011 full year, however, investment was up 9.7% at $116 billion. China attracted investment of $105.7 billion in 2010, up 17.4% from the previous year.
Ministry spokesman Shen Danyang expressed optimism about the outlook this year, telling reporters that FDI will maintain relatively fast growth and that China remains a fairly attractive investment destination.—Yajun Zhang contributed to this article.