Real estate prices settling into stable pattern

To buy or not to buy - that is the question for Hu Chengru, 39, a prospective homebuyer in Shanghai.

Hu had realized some 3.6 million yuan ($529,000; 503,000 euros; 421,000) from the sale of her old apartment earlier this year. Now, she would like to buy a more spacious flat for "upgrading" the quality of her life. But she is still waiting for the right time to buy.

"Every day, I ask whoever I think may have some knowledge about the real estate market: 'Will home prices drop in Shanghai?'

"Their answers have ranged from 'Definitely not' two months ago to the currently 'Perhaps'," Hu says.

In key cities like Beijing and Shanghai, home prices are less likely to drop significantly, but the pace of the rise has slowed, analysts say. "One major reason there's little chance of a sharp fall in home prices in key cities is the great demand as reflected by demographic data," says Liu Ligang, an economist at Citibank China.

"Some 70 million residents are entering the age of getting married, having children or having a second child, and urbanization-related migrants also need housing in cities. Without new developments, some cities may exhaust their current inventories in just nine months. Supply of land is limited. Considering all these factors, home prices in key cities are not likely to drop significantly."

The average price of apartments may not drop significantly but transaction volume may shrink to 40 percent in the first half of 2017, in immediate response to measures against speculative buying, says Zhang Yu, an analyst at investment banker CICC Ltd.

"In first- and second-tier cities, demand from speculators has been curbed after policy tightening, so transaction volume will shrink, but the average price won't decline because land prices are high and demand is still solid and increasing, while supply is short," Zhang wrote in a research note.

In third- and lower-tier cities, particularly those neighboring key cities, prices may rise slightly around 10 percent, which would be natural and rational, Zhang says.

A research note from Guotai Junan Securities cites financing conditions as a factor for stable growth of the real estate sector.

The note further says monetary policies have not been tightened much, which gives the real estate sector spacious room to grow. Also, as a pillar of economic growth, real estate is not likely to face significant downward pressure if the overall economic growth is positive.

Economists says that uncertainty remains, including changes to policies, the pace of urbanization and investment growth. Market corrections, if any, will be mild.

Wang Tao, an economist with UBS Securities, says policymakers would not like to see a significant decline in the real estate market because that would impact overall economic growth.

"Construction and investment recover mildly and slowly, so even if the real estate market sees pressure, it will not decline as it did two years ago," Wang says.