But with oversupply still looming large, any recovery especially in home prices is likely to be slow, tempering hopes that housing could provide a badly needed boost to the Chinese economy as it struggles to overcome the slowest growth since the global financial crisis.

"December sales figures were a positive surprise because they were better than the September and October figures which were traditionally the golden and silver month," Macquarie analyst David Ng said. "They're stimulated by loosening policies."

Ng said however that sales would see slow, healthy growth rather than a big rebound.

China's top listed residential developer China Vanke reported a 129 percent surge in sales in the last month of 2014 from a year earlier, while sales over the same period for mid-sized Country Garden leapt 167 percent.

Sixty percent of China's major cities recorded a rise in sales volume in December, according to housing data researcher CRIC, with first-tier cities rising the most, up more than 15 percent from November and over 45 percent from a year earlier.

China has put in place a series of stimulus measures including interest rate cuts to spur home buying demand and market liquidity since the third quarter.

Betting on even looser policy to come, investors have been snapping up property shares, pushing the property sub-index in Shanghai to its highest since February 2008.

But housing supply remains excessive despite the pick-up in sales, with only two major cities out of 23 seeing a decline in inventory at the end of December, CRIC data showed.

"Inventory is high. We can't raise prices until after the market digests them, " said a chief executive officer of a developer based in southern Guangdong province. "The sales went up but prices didn't; it won't be easy for us to raise prices."

China's new home prices fell for the 11th consecutive month in November by an annual 3.7 percent, the biggest drop since 2011. Property sales hit 132.2 million square meters, the highest level in 11 months, though still down 11 percent from a year earlier.