Despite a mild recovery in new home prices, China's housing market continues to grapple with persistent oversupply, raising expectations for more supportive policies.

China's leadership signaled more stimulus for the industry this week. President Xi Jinping on Tuesday urged efforts to digest housing inventories and promote sustained development of the sector.

A cabinet meeting presided over by Premier Li Keqiang on Wednesday also called for household registration reforms, which may encourage more rural residents to settle down in cities, to boost consumption of homes and electronic appliances.

Real estate investment growth slowed from 2.6 percent in the first nine months to 2 percent in the first ten months, data from the National Bureau of Statistics (NBS) showed Wednesday.

"Without more supportive measures, we're likely to see a decline in real estate investment," said Guo Yi, marketing director with Yahao Real Estate Selling and Consulting Solution Agency.

Real estate accounts for a crucial proportion of investment and consumption in China, so home purchases will continue to be encouraged as the macro economy is under pressure, Centaline Property chief analyst Zhang Dawei noted.

China's property market took a downturn in 2014 due to weak demand and a surplus of unsold homes. The cooling has continued into 2015, with sales and investment slowing.

To combat the slowdown, the government has cut the benchmark interest rates and banks' reserve requirement ratio, reduced deposit requirements for second-home purchases, and rolled back other residential purchase restrictions in some cities.

The moves have worked to some extent. October's new home prices went up slightly both on a yearly and monthly basis for the third consecutive month, according to a survey by the China Index Academy, an independent research institute.

Higher prices and sales have somewhat improved fiscal conditions for property developers, but "they don't dare to boost investment on a large scale because inventories are still high and it takes time to consume the unsold houses," Guotai Junan Securities chief economist Lin Caiyi explained.

NBS data showed 686 million square meters of real estate were up for sale by the end of October, increasing 17.8 percent year on year.

Previous stimulus played a part in accelerating the process of de-stocking, but cannot reverse the oversupply trend, especially in smaller cities, in the short term, said Chen Jie, a researcher with Shanghai University of Finance and Economics.

Sales growth has slowed in recent months, with once brisk business in first-tier cities also slackening, as Ding Zuyu, co-president of real estate service company E-House China, observed.

In the Jan.-Oct. period, sales of residential property increased 7.2 percent year on year, 0.3 percentage points lower than that recorded in the Jan.-Sept. period, according to NBS data.

Chinese property developers are having a harder time than before, leading to a decrease in investment and the number of developers, said Zhang Baoguo, chairman of Mutual Affluency Investment Fund.

"There used to be 80,000 developers in China. Now many of them have quietly left the industry," Zhang said.