PROPERTY prices in 70 major Chinese mainland cities posted the first month-on-month decline in August since the country started to compile the gauge in July 2005,.

The drop may herald further corrections in the property industry and will probably lead to government policies aimed at helping capital-stripped developers, industry analysts said.

The average housing prices in the 70 mainland cities dropped 0.1 percent last month from July, the National Development and Reform Commission said on its Website. Prices of new homes also dipped 0.1 percent in August from a month before.

The year-on-year increase of the mainland average property prices in August was 5.3 percent, the slowest pace in 18 months. Growth has slowed for seven straight months from a record high of 11.3 percent in January, according to the NDRC.

Prices of second-hand housing prices were unchanged in August from a month ago and were up 3.9 percent from a year before, the smallest rise since the nation started to track the index, the NDRC said.

The average property price in Beijing was unchanged in August from July while that in Shanghai posted a 0.2 percent month-on-month decline last month, according to the NDRC.

“It may be just the beginning (of a downward cycle),” said Wu Ke, a Zhongtian Investment Consulting Co analyst. “It’s very likely that developers will gain support from the government in the coming months.”

China’s property industry has been plagued by steep drops in transaction volumes this year after the government raised minimum down payment requirements and hiked the interest rates for people who hold more than one mortgage.

Today’s data came just after the People’s Bank of China slashed benchmark lending rates for the first time in six years and lowered the amount of capital banks must set aside as reserve.