Authorities should be aware of the risks and make timely moves to prevent it causing systematic economic collapse

Signs have emerged that the curtain is falling on the decade-long golden period for China's real estate.

The average price of newly built homes in China's 70 major cities rose 8.7 percent year-on-year in February, slightly lower than the 9 percent growth in January, according to data from the National Bureau of Statistics. Compared with 62 cities that saw a price rise in January, the number decreased to 57 in February and the margin of the average price rise declined from 1.2 percent month-on-month to 0.7 percent. The rise in the average house price in Beijing, Shanghai, Guangzhou and Shenzhen, the four first-tier cities that witnessed a frenetic price rise in 2013, fell below 20 percent year-on-year.

Along with the slowing price rises is the drastic drop in home sales. In Beijing, only 2,221 new homes were sold in February, a record low since 2007. The February volume for sales of secondhand houses was 5,441, decreasing by 38 percent from January and 46.3 percent from a year earlier, a new low in 24 months. The situation was even gloomier in March, with only 7,252 new and secondhand homes sold in the first half of the month, much lower than 28,900 sold during the same period of last year and also the lowest in six years.

Some recent negative news on the housing sector has caused market worries. Vanke, a leading real estate developer in China, recently brought to the market one of its residential developments in the south of Beijing at an average 21,000 yuan ($3,387) per square meter, far below the previously anticipated 26,000 yuan. As the weather vane of China's housing prices, the price decline in Beijing is seen as signaling a possible price decline across the country and strikes a psychological blow to those holding an optimistic outlook on home prices. The collapse of the fund chain recently reported about a developer in Zhejiang province has further aggravated pessimism over the prospect of the rosy housing market. The drastic fall of the yuan's exchange rate against the dollar in February has also caused widespread concerns over the negative impacts caused by the possible exodus of international capital from the Chinese housing market.

There is no doubt that a chilly autumn is coming for China's housing market. Many analysts had previously concluded that there will be at least another 10 years of golden time for the market. Qiu Baoxing, vice-minister of housing and urban-rural development, said on the sidelines of the annual sessions of the top legislature and top advisory body that China's housing sector will unlikely encounter a big crisis in 10 years, citing enormous housing demand from an additional 300 million Chinese people who will move to urban areas or whose urban homes will be rebuilt or renovated. It is believed by many that the housing market will still be China's fastest-growing sector before the end of its urbanization. Compared with such a view, some are more wary, but they still hold an optimistic outlook on the housing markets of first-tier and provincial capital cities. However, the lackluster price rises in Beijing and other first-tier cities in recent months and their slackened sales mean that the prospect for China's housing market is not that optimistic.

The slowed price rises and the drastic drop in sales this year have taken place at a time when no explicit housing regulations are being formulated. The government even refrained from taking administrative measures after the housing market experienced an unreasonable price rise in 2013, to leave the settlement of the price issue to the market. This also proves the recent deceleration of home price rises is largely a kind of market trend.