Early signs of a floor under China's sinking property market

Brent Lewin | Bloomberg | Getty Images

Even as China's home prices suffered their biggest annual fall in nearly four years in October, there are early indications the worst might have passed as property sales, investment and construction all show some signs of recovery.

For global investors who fear that a weak property market is the single biggest threat to the world's second-largest economy, a bottoming in house prices could be the best news they get from China as the year draws to a close.

The housing market is still vulnerable and could sag again if policy support fades, a risk noted by Australia's central bank this week, but some home buyers, brokers and developers are confident a shift is underway.

Read MoreChina's home price decline appears to be easing

"The housing market seems to be warming up a little," said Guo, a 24-year-old who has been looking to buy in the capital, and who declined to give his full name. "Now I can think about buying a small house in the Beijing suburbs."

After home prices powered to record highs in four of the five years from 2009, the market sagged this year as Beijing tried to calm prices with controls such as lending restraints and limits on multiple purchases.

Prices have fallen in each of the past six months, to be down nearly 4 percent from an all-time peak hit in April. In annual terms, prices fell 2.6 percent in October.

That has seen policymakers beat a hasty retreat on some measures, and mortgage rates and downpayment levels were cut in September for the first time since the 2008/09 global financial crisis.

Their efforts may be paying off.

The monthly fall in prices moderated to a four-month low of 0.8 percent in October. The slide in mortgage demand also eased. Loans were down 4.3 percent in the first 10 months of 2014, after a 4.9 percent drop between January and September.

Read More Why China's property slowdown isn't so scary: Goldman

"Before October, it was hard to persuade people to view houses," said Zhang, a broker at Lianjia Real Estate in Beijing. "Now, many are willing, and they decide to buy really quickly if they like the homes."

Potential surprise

Inventories of unsold homes in the biggest cities fell 0.9 percent on a monthly basis for the first time in nearly nine months, real-estate services firm E-House China said.

Tim Condon, ING's head of research for Asia, said the housing data pointed to fewer cities reporting falling prices in the months ahead, and it was a matter of time before house prices reached a floor.

"We think housing represents a potential upside surprise to growth forecasts," he wrote.

China is set to post its weakest growth in 24 years this year, with market economists expecting growth to come in just under the government's 7.5 percent target. Next year, there are expectations the government will aim for 7 percent growth.

Read MoreChina real estate: A bubble bursting?

There are other positive signs for the housing market. Annual growth in property investment quickened to 11.8 percent in October, as housing construction leapt around 43 percent from a year earlier, a sharp reversal after September's 0.2 percent decline.

Land purchased by developers climbed an annual 1.2 percent annually in the first 10 months, after a 4.6 percent fall between January and September.

"The market is bottoming out," said Fan Xiongchong, vice-president of Sunshine 100 China, a mid-sized developer in Beijing.

"But it's hard to tell how fast or stable the rebound would be."