China property price index slips in May

But the decline won’t boost buyer sentiment.

China’s 70-city price index pulled back 0.16% month on month in May, recording its first decline since June 2012.

However, this decline will not be enough to ease buyers’ hesitations, according to a report by Barclays.

“Beijing expects to see 36 new launches in July (vs. 33 in June), with over 50% of them likely priced on a par with or below market expectations. Nevertheless, with housing inventories accumulating, we think more attractive price discounts are needed to boost homebuyer sentiment,” stated the report.

Here’s more from Barclays:
Given rising sales pressure, we expect developers to offer more attractive pricing in 2H14, while we think any potential sales recovery could be a powerful catalyst for sector performance.

Last week China property stocks underperformed the HSI by 3.6%, with the sector's NAV discount expanding to 53%. While the physical housing market remained lacklustre, with the housing inventory period rising to levels last seen in late-2011/early-2012, we believe cheap valuations essentially imply limited downside.