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China house prices fall 3.7% in November, third straight decline

China's home prices posted a third consecutive annual drop in November, fueling speculation that the government will need to undertake further measures to avert a sharp slowdown in the economy.

New home prices fell 3.7 percent in November from the year-ago period, after dropping 2.6 percent in October, according to Reuters calculations of official data released by the National Bureau of Statistics Tuesday.

"We do think there's a light at the end of the tunnel, but you have to keep in mind that not all of the cities are equal. We see the tier-one cities as ultimately having the best balance of affordability but those are also the cities where the restrictive measures are still in place," Michael Klibaner, regional director and head of research for Greater China at Jones Lang LaSalle told CNBC.

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In Beijing, home prices fell 2.1 percent on year in November, faster than October's 1.3 percent decline. Meanwhile, prices fell 2.9 percent in Shanghai, faster than October's 2.0 percent drop.

Month-on-month, home prices declined 0.5 percent. In October, prices fell 0.8 percent on month.

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Feng Li | Getty Images

"You will also see with prices still falling, we anticipate that in 2015 there will be more enforcement of those regulations. Ultimately, tier-one cities will be fine. Tier-two cities will also be balanced in supply and demand and with affordability. So that's where you will see a recovery. That's where the price declines will decelerate and we see those being stable in 2015. It's the lower tier cities where the bigger problems lie," Klibaner said. "That's where we have big problems in oversupply and a mismatch between pricing and affordability."

Economists have cited a property bubble as the biggest risk to China's economy. The sector contributes more than 15 percent to the world's second-largest economy and impacts more than 40 other sectors from cement to furniture.

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Chinese authorities have introduced a slew of measures in response, most recently loosening mortgage restrictions by easing the qualification criteria for first-time buyers and relaxing loan terms for existing homeowners.

China's economy appears on track to undershoot the 7.4 percent growth target that Beijing set early this year. Meanwhile, a recent central bank paper suggested growth could slow to 7.1 percent next year.