In Beijing, prices gained 0.9 per cent last month, slowing from a 1.2 per cent increase in November. Prices dropped in the southern regions, with a 1.4 per cent slide in Guangzhou and a 0.1 per cent decline in Shenzhen.

The central government wants to cool a runaway property market that threatens to put housing beyond the reach of the average income-earner.

In October last year, it raised the minimum down payment for investors who already owned a house, and ordered banks to charge buyers with a second property higher interest rates.

At the same time, the People's Bank of China raised the benchmark one-year lending rate sixth times last year to curb surging inflation. More rate increases are expected this year.

The Shenzhen Municipal Bureau of Land Resources and Housing Management reported yesterday that the market had reached a tipping point, with not only sales volume slowing but prices as well.

Property analysts expect price volatility to continue in Guangzhou and Shenzhen, as those cities had been the most speculative markets on the mainland. But they do not expect property prices to drop materially nationwide.

John Tian, a national director of Jones Lang LaSalle in Guangzhou, said prices would remain stable amid continuing demand. 'The pressure comes mainly from the coming interest-rate increases,' he said.

Li Wenjie, the head of Centaline Properties in Beijing, said macro tightening measures and policies to rein in property prices were starting to slow sales. 'Prices have started to fall in some cities,' he said.

He attributed the price declines in Guangzhou and Shenzhen to a concentration of speculators in the two southern cities.

'In Beijing, more than 70 per cent of the buyers are end-users, but in Guangzhou and Shenzhen, more than 60 per cent are speculators,' Mr Li said.

Meanwhile, Fitch Ratings expects developers to face more pressure in financing and liquidity this year after an easing of price increases.

But the rating agency did not expect property prices to drop nationwide as it said Beijing's policy of bringing more housing supply to the market would need time to take effect.

The State Council announced last week that developers would have to pay a 20 per cent levy on the value of their land if they did not start work on it within a year of obtaining construction permits or if they failed to complete at least 33 per cent of their development plans or invest at least 25 per cent with two years.

Sites would be confiscated without compensation if they were left undeveloped for more than two years.