Chinese new home sales fell in August in 68 of 70 cities monitored by the National Bureau of Statistics. While the slowdown in the real estate markets is bearish for steel demand, so far there is no sign of an immediate collapse in the market, analysts tell Kallanish.

The fear for steel makers and traders is that falling prices is leading to falling investment. Over January-July, year-on-year growth in real estate investment fell to 13.72%, the slowest growth since early 2009, when the financial crisis caused jitters in Chinese investment.

However, one analyst described the slowdown in investment as “a glide down, not collapse.” The steady slowdown in investment is still bearish for the steel industry, but it suggests the market will not collapse sharply.

2015, however, is another issue. Government pressure to clear China’s inventory of unsold homes means likely further declines in prices and fewer new starts, the analyst warns. Steel traders agree, with one telling Kallanish he expects that this is the beginning of a long-term period of weakness for construction steel.

Of the 68 cities which saw falls, the bellwether city of Hangzhou saw the worst performance, with prices dropping 2% over the month. Only the pretty coastal city of Xiamen saw prices increase in August, by 0.2%.

Year-on-year the picture was also bleak, with 22 cities already having wiped out gains made earlier in the period. Hangzhou again performed the worst with a fall of 5.4%.