HONG KONG (Reuters) - Average new home prices in China's 70 major cities fell for the ninth straight month but showed some signs of stabilising in the top cities, signalling an improvement in market sentiment after the central bank cut interest rates and lender's reserve requirements.

Average new home prices in China's 70 major cities were down 0.4 per cent in January from December, an ninth straight monthly drop following December's fall of 0.3 per cent, Reuters calculated from official data published on Tuesday.

New home prices in Beijing fell 0.1 per cent between December and January, slowing from a 0.2 per cent fall in December from November, while Shanghai prices were flat, stabilising after eight straight month-on-month falls.

Against year-ago levels, the National Bureau of Statistics data showed new home prices fell for the fifth consecutive month, down 5.1 per cent, accelerating from the annual 4.3 per cent fall in December.

Of the 70 major cities the NBS monitors, 64 posted a monthly decline, down from December's 66.

Liu Jianwei, senior statistician at the National Bureau of Statistics (NBS), said in a statement prices became more polarized among different cities, with first-tier centres stabilising while second-tier narrowed their declines and third-tier saw faster falls.

Stabilising prices in Beijing and Shanghai suggest China's real estate market is showing signs of recovery, as some developers raise prices in major cities following government efforts to revitalise an economy growing at its slowest rate in more than two decades.

Some major Chinese developers also said they are planning to raise prices for new luxury projects in prime areas this year.

New mortgage loans in January doubled from the previous month to 329.4 billion yuan (S$71.46 billion), official data showed last week, showing Beijing's loosening monetary policy was bearing fruit.

"The market sentiment for this year is better than 2014 so developers are less willing to cut prices," said Clement Luk, chief executive officer of realtor Centaline's China eastern district. "But they don't have the environment to raise prices by large degree because the macro-economy is not good; buyers still tend to be prudent and there's still too much inventory out there."

Industry executives and economists also caution prices may slide again in February as China settles in for long holidays starting next week.

China's annual consumer inflation hit a five-year low in January while factory deflation worsened, underscoring deepening weakness in the economy and heaping pressure on policymakers to inject more stimulus to underpin growth.

Nomura China economist Hua Chang Chun said he expected growth in property investment to drop to 8 per cent this year compared with 10.5 per cent in 2014.

"It's an acceptable level but this is under the scenario that the central bank carries out one more rate cut and lowers required reserve ratios three more times this year."