Sales, prices pick up

But some economists noticed that despite the overall sluggish market, house sales and prices had already picked up in June, especially in major cities.

Data from the bureau showed that the decline in house sales in the second quarter is already losing momentum.

Nationally, house sales in the first half of this year dropped 10 percent year-on-year, compared to the 13.6 percent decline in the first quarter.

In June, China's property sales revenues increased 6.9 percent, snapping a seven-month losing streak.

House prices have rebounded in major cities in the past month. The property research institute China Index Academy reported that, in 10 major cities, house prices, calculated according to land transfer fees, surged 43.9 percent from the first quarter to reach 2,904 yuan ($455) per square meter.

In comparison, the average house price in 100 cities was 1,474 yuan per sq m, up 18.6 percent year-on-year.

Qu Hongbin, HSBC's chief economist for China, estimated that the warming up of housing turnover in the past two months may have significantly eased developers' liquidity pressures.

Analysts believed the two interest rate cuts in June and early July had also reduced developers' lending costs.

"The property market now poses a dilemma for policymakers. On the one hand, further curbs may jeopardize the overall economy and affect developers, which may cut the housing supply and thus push up prices. On the other hand, loosening curbs may frustrate the public, who are not yet satisfied with the effect of the curbs," Yang said.

However, the mainstream outlook is that the curbs will remain in place over the next half of the year, while the central government will ramp up efforts to encourage developers to build more affordable homes.

These moves are expected to prop up real estate investment while satisfying genuine demand.

Yang said the central government would urge local governments to beef up land supplies for affordable homes, but he cast doubt on the enthusiasm of local governments and developers for this endeavor.

zhengyangpeng@chinadaily.com.cn