THE country’s property market is expected to cool further in 2019, with smaller price rises and falling home sales adding to pressure on the world’s second-largest economy, a recent poll showed.

Smaller cities, which have seen sharper price gains this year, may face greater risks of a slump as economic activity slows and financing conditions remain tough for smaller developers.

China’s average residential property prices are forecast to rise 2 percent in the first half of 2019 from a year earlier, and just 0.5 percent for the full year, a survey with 16 property analysts and economists showed.

That would mark the weakest annual rise in five years in a sector that traditionally has been one of the country’s major growth drivers and store of household wealth.

Analysts have downgraded their estimates since the last poll was conducted in September, when prices were expected to rise 3.3 percent in the first six months of 2019.

Housing sales are expected to fall 5 percent in 2019, the latest poll showed, with property investment slowing to 4 percent.

China’s real estate market directly impacts over 40 industries and highly correlates to domestic demand from steel to washing machines.

Despite gradually slowing from its peak levels in mid-2016 as authorities sought to cool price rises, the sector has remained relatively buoyant due to strong underlying demand for housing and few alternatives for investment.

October data showed new home prices rose 8.6 percent compared with a year earlier, the fastest pace since July last year.

Recent price gains have been mostly driven by smaller cities which have fewer restrictions on homebuyers than megacities.

However, market sentiment has turned more cautious since the start of the second half of this year following a surge in failed land auctions.(SD-Agencies)