BEIJING/HONG KONG (Reuters) -Missed Payments on investment products by a leading Chinese trust firm and a fall in home prices have added to worries that China’s deepening Property sector crisis is rapidly stifling what little momentum the economy has left.

Zhongrong International Trust Co., which traditionally had sizable real estate exposure, missed payments on dozens of investment products since late last month, a senior official has told investors.

China’s $3 trillion Shadow Banking Sector is roughly the size of Britain’s economy, and concerns about its outsized exposure to property and risks to the wider economy have grown over the past year.

A string of defaults in the shadow banking sector could have a wide ranging chilling effect as many individual investors are exposed to the high-yielding trust products. Missed payments could weigh on already fragile consumer confidence in the absence of stronger support measures from Beijing.

Barclays (LON:) was among a number of global banks to cut its forecasts for China’s 2023 growth after weak data on Tuesday, citing a faster-than-expected deterioration in the housing market. It lowered its growth forecast to 4.5% from 4.9%.

So far, China has largely managed to avoid a spillover of a debt squeeze in the property sector to the country’s $57 trillion financial industry despite a rising number of developers defaulting on repayment obligations.

But news of fresh defaults has triggered contagion fears.

Adding to the gloom, China’s new home prices fell in July for the first time this year, the latest in a string of downbeat data that underlines the urgency for bolder policy support.

Prices fell 0.2% month-on-month on a nationwide basis and 0.1% year-on-year, according to Reuters calculations based on National Bureau of Statistics (NBS) data.

But the picture is far worse outside of the country’s megacities like Shanghai and Beijing. Average new home prices in the 35 smallest cities surveyed by NBS fell for the 17th straight month in June on a year-on-year basis.

The worsening debt crisis at major developers including Country Garden, the country’s largest private developer, has scared away many home buyers, with property investment, home sales and new construction contracting for more than a year.

Given the property market has traditionally accounted for about a quarter of China’s economy, some analysts say the slump, combined with the shock from three years of strict COVID measures, has had an unprecedented impact on activity.

Most analysts expect further falls in home prices and sales over coming months.

MORE HELP NEEDED

Tuesday’s data added to a raft of weak economic indicators in recent months, and has raised calls from China watchers for authorities to roll out bolder support measures to arrest the downward spiral.

Gerwin Bell, PGIM fixed income’s lead economist for Asia, said Country Garden’s trouble underscored that the fallout from the property market crash has not been contained and is spilling over across the wider economy.

“Arresting the adverse spillovers from property will require significantly larger fiscal stimulus than the authorities have so far entertained. We expect the Chinese authorities to soon come to the same conclusion.”

‘EASING MEASURES’

China’s property sector continues to struggle despite an extension of financial support for developers and incentives for first-time home buyers and upgraders.

Among 70 cities, 49 saw a fall in new home prices month-on-month in July from 38 cities the previous month.

Last month, China’s top leaders in a Politburo meeting vowed to adjust property policies.

The housing regulator has also urged efforts to prop the sector such as via lower home mortgage rates and down payment ratios for first-time homebuyer and easing mortgage curbs for people who want to upgrade their homes.

Some cities including Zhengzhou have already relaxed a handful of property curbs in efforts to shore up sentiment. Provincial capitals like Xian and Fuzhou are considering reductions in downpayments ratio for residents who will buy their second flats.

“We continue to expect more housing easing measures in coming months, including further reduction in down-payment ratios and more relaxation of home purchase restrictions in large cities, among others,” economists at Goldman Sachs (NYSE:) said in a note to clients.

However, most economists expect the downturn in home sales and prices to persist for a while.

“High-frequency data in early August does not suggest any meaningful improvement in the property market,” said Wang Tao, Head of Asia Economics and Chief China Economist at UBS Investment Bank.

“Without additional major policy easing and/or fiscal support, property sales and investment may weaken further or stay at the bottom for longer than assumed in our baseline,” said Wang.