Mainland home sales plunged last month after local governments fell in line with control measures demanded by Beijing.
But agents and analysts said the impact of the measures was less severe than they had expected, and prices had held firm because some local authorities had not strictly enforced a 20 per cent capital gains tax ordered by the central government.
They said sales would improve next month and prices would continue to rise but at a slower pace.
In February, Beijing announced five measures aimed at cooling the property market, including strict checks on mortgage qualifications for those buying second homes and enforcing a capital gains levy of 20 per cent on sellers that was first announced in 1994.
The central government told local governments to work out schedules for the implementation of the tax before the end of March.
By then, 26 key cities had announced details of how they would implement the five policy measures, according to a BNP Paribas report. By May 2, the number of cities had increased to 35, Xinhua reported.
In reaction to the measures, sales of second-hand homes in Beijing last month fell 88.1 per cent from March to 5,212 units, the lowest in 15 months, according to Centaline Property Agency. In Shenzhen, sales were down 30 to 40 per cent to about 6,000 units, following a surge to about 10,000 in March from a monthly average of 5,000 to 6,000 as homebuyers rushed to complete deals before the implementation of the tax, according to Andy Lee Yiu-chi, the chief executive for southern China at Centaline.
Sales dropped 60 per cent in Guangzhou and 30 per cent in Shanghai, the media reported.
Despite the sharp fall in sales, Lee remained positive on the outlook for the market. He said the sales decline was not as big as expected and the impact on prices was modest.
"We had expected the market would suffer a serious blow in April and May but so far it has remained stable in terms of prices and sales volume," said Lee, who added that the capital gains tax had not yet been enforced in Shenzhen and several other cities.
Apart from Beijing, control measures were not as severe as many had expected.
Local governments, except in Beijing and Shanghai, have indicated tolerance for property price growth, with the upper limit pegged at 10 to 14 per cent to this year's per capita disposable income growth, BNP analyst Lee Wee Liat said in a report last week.
Alan Jin, an analyst at Mizuho Securities, said: "Beijing's decline is exceptional as the city is most diligent in terms of implementing the new measures. It is the only city which has been serious about levying the 20 per cent capital gains tax."
He expected the sector's sales for last month to drop 20 per cent month on month but rise 25 to 30 per cent year on year. The month-on-month decline was due to a high base in March and impact from the new measures.
"We expect sales in May to be higher than in April. Prices will continue to rise but the pace of growth may slow because of the local government's management of the housing price by postponing pre-sales approval for high-end projects," Jin said.