China's property sales have fallen since the government began tightening and analysts expect more to be done in 2017 to deflate the bubble.
The China Index Academy, a real estate research institute, said property sales in China dropped 36.7 percent month on month in January, in terms of floor space.
On a yearly basis, sales fell by 27.3 percent in January, with Beijing and Shenzhen declining by nearly 50 percent, according to the China Index Academy.
From Jan. 1, banks in Beijing raised mortgage rates for first home buyers. On Jan. 19, Shenzhen tied new home prices to the average price of houses on sale in the neighborhood. On Feb. 6, Chongqing also tightened its policy.
"Houses are built to be inhabited, not for speculation" -- the tone set by the central leadership at the Central Economic Work Conference in December -- was written into a number of local governments' annual work reports, including Shanghai.
Besides measures taken since October last year, dozens of cities have announced purchase limits and tightened mortgage restrictions after two years of easing, starting with the relaxation of purchase restrictions in 2014.
Recovery, however, has been patchy, with economically strong areas reporting price rises and less developed areas still reporting huge inventories of unsold homes.
Policymakers are trying to reduce credit flowing into speculative buying to curb asset bubbles in 2017, calling for a long-term, market mechanism that prevents bubbles and reduces the need for big changes in investment, law, and fiscal tools.
In cities where prices are rising fast, more land should be made available for building residential housing, while de-stocking must continue in smaller cities.
Real interest rates are rising following the increase to the standing lending facility (SLF) rate a week ago, a move widely seen as a heavy blow to the property market, coming only weeks after the Central Economic Work Conference said that in 2017 China will "take control of" the money supply at the macro level. Credit policy at the micro level should support the reasonable purchase of homes as residences and tightly restrict credit in speculation.
If the overall monetary stance continues to tighten, it may provoke a genuine turning point in China's monetary environment, causing the real estate market to cool even further.
Authorities are already walking a tightrope between curbing speculation and crazy prices, and clamping down too hard on a sector which has proved not only a significant growth driver, but also notoriously fickle.
The real estate market played a big part in 2016 growth, which might have been at a 26-year low, but was still well within the target range and significantly better than any other large economy.
Of 70 large and medium-sized cities surveyed, 46 saw prices for new residential housing climb month on month in December, down from 55 in November and 62 in October, according to the National Bureau of Statistics.
January's figures for large and medium-sized cities will be released on Feb. 22.