Vice-Premier Li Keqiang has sent a chill through the property market by reiterating Beijing's determination to maintain its tough stance on the housing sector despite tumbling prices in some big cities.
Li's remarks during a 'fact-finding tour' in northern Hebei province added to concerns that prices could fall even further if the government does not ease curbs introduced to cool an overheated sector but which now seem to be weighing heavily on developers and speculators.
'The policies to curb the property market have had certain effects,' Li was quoted by Xinhua as saying.
'But the market is still in a critical stage and we must stand firm, keeping the curbs until prices are effectively controlled.'
Beijing started to rein in runaway property prices at the beginning of the year, with local governments limiting home purchases and banks tightening loan approvals.
The measures have rocked the market back on its heels, with developers, facing liquidity pressure, slashing prices hard to boost sales. That in turn has enraged homeowners, who are demanding refunds.
In Shanghai, developers of unfinished flats have offered discounts as high as 30 per cent to attract buyers. Hundreds of existing apartment owners have protested against the huge price cuts, as the value of their holdings has plummeted, heightening fears of social unrest.