Beijing - As house sales and prices tumble in China amid heightened uncertainty brought by the global financial turmoil, millions of would-be first-time buyers are locked in a standoff with giant, government-backed property developers.

"Developers expect the government to save the market and loosen the control of property loans," said Zhou Fan, chairman of the Zuoyou Real Estate Consultancy, based in the southern city of Guangzhou.

"Consumers expect the government not to take measures and think prices are still too high," Zhou told Deutsche Presse-Agentur dpa.

Many buyers are waiting for an expected fall in property prices, depriving the developers of the advance cash they need to fund some larger projects.

"No one will buy a house whose value is expected to decline tomorrow," Zhou said.

The central bank last week tried to spur consumption and help the property market by cutting its base interest rates and the reserve ratio for commercial banks, and most analysts expect further measures this year.

"It's certainly going to be a difficult two years for the Chinese and falling property prices is one of the issues that is going to make it difficult for them," said Peter Tebbutt, senior director of financial institutions for Fitch Ratings in Hong Kong.

"The property market is going to take a hit, and the export market and accessories market for exports, that's going to take a hit also," Tebbutt told dpa.

Last month's pre-construction sales of residential property in Beijing dipped to 2,788 units, the lowest figure for three years and down 76 per cent from September 2007, a city government website reported.

Shanghai and other major cities reported similar gloomy news of property sales.

International property firm Jones Lang LaSalle reported last week that Shanghai's luxury residential market over the past three months "showed little change as buyers and sellers are still locked in a stalemate."

Eleven out of 28 property firms listed on China's stock exchanges who released third-quarter performance reports by last week, warned of a "gloomy performance due to a slide in profits," the China Daily newspaper reported.

Vanke, China's biggest listed property firm, and two major rivals have reduced prices of apartments by at least 15 per cent in the last two months, the newspaper said.

More problems for developers were reported in the southern manufacturing base of Shenzhen and other cities where some recent buyers decided to default on their mortgages in protest against the falling value of their property.

Some prospective buyers are also put off by long-standing problems of corruption, lies, and collusion between developers and local officials in the property market.

In one of the latest cases, a labour director in the southern city of Nanchang was given a suspended death sentenced last week after he was convicted of taking bribes in exchange for granting property rights and using 69 million yuan (10 million dollars) of government funds for construction projects.

Local governments often sell land rights cheaply to developers in return for promises of public infrastructure, allowing them to build huge commercial and residential complexes.

"Land has become one of main income sources for many local governments, and the tax is also very important," Zhou said.

"The corruption problem should not be neglected, but with economic development and stronger political control this phenomenon is decreasing," he said.

Zhou's view was backed by a recent report by Jones Lang LaSalle that raised the openness rating of China's property market from "low transparency" to "semi-transparency."

The continuing migration of tens of millions of rural residents into new or expanding cities is also likely to help ensure that prices of low-income housing do not fall too far.

Jing Ulrich, managing director of JP Morgan in Hong Kong, said recently that she expected China to emerge relatively unscathed from the international financial crisis and believed interest-rate reductions will help the property industry.

"China's exposure to the ongoing credit crunch is still limited, given the closed nature of the country's financial markets," Ulrich said in a report titled "Global financial turmoil: implications for China."

"The property sector stands to benefit from a reduction in borrowing costs," she said, adding that lower mortgage rates "should provide modest support for property demand."

Zhou also remains optimistic that the property market will recover after a period of adjustment, citing the growing demand among those waiting for the right time to buy, but he warns that a longer slump could prove disastrous for some firms.

"If the wait-and-see period is too long, it will seriously hit the real estate market," he said.

"I think if the real estate market does not return to prosperity by the middle of next year, half of the developers in China will face oblivion," Zhou said. (dpa)