Property market pains spreading

New home prices fell month-on-month in September in 69 out of 70 major cities tracked by the National Bureau of Statistics. Last month's decline pushed the average home price in this statistical pool down 1.3 percent compared with September 2013, marking the first such annual drop in almost two years.

China's slumping home prices have come as a rude shock to investors. In the past, expectations of continued price growth led many to funnel large portions of their wealth into real estate. Now though, it looks like some unfortunate buyers could have to wait several years before they see a return on their investment.

Aggregate demand for property is also unlikely to push housing prices higher. It is generally believed that overall demand has expanded mainly through the urbanization of farmers and rural dwellers. Halting income gains though mean that few in China's countryside can afford a home in one of country's cities, despite recent signs of price weakness.

If conditions in the property market continue to soften, it could lead to a series of localized debt crises, since many of the country's local governments remain heavily reliant on revenue from land sales to pay for social services and fund projects.