Some smaller cities, including the eastern city of Tongling in Anhui province and Ningbo, the coastal city of eastern Zhejiang province and the southern city of Nanning in Guangxi, have started to loosen home purchase rules.

Back in 2012, Beijing forced governments in areas including Wuhu, Foshan and Chengdu to retract plans to ease controls on real estate, but there has been no such response this year.

April sales adding fuel to fears of property bubble

Home price growth slows, further moderation eyed

"They (policymakers) are still watching. Property prices have started to fall but they still don't see any serious problems," said a senior economist at a government think-tank in Beijing.

"The bottom line is that a property slowdown doesn't trigger financial risks," said the economist, who spoke on condition of anonymity.

President Xi Jinping has said China should adapt to a "new normal" of slower growth as the government pushes market-based reforms to cut debt levels in the economy and generate more sustainable long-term growth.

The cooling real estate market helped drag annual economic growth to an 18-month low of 7.4 percent in the first quarter, and a sustained fall would risk China missing its economic growth target for the first time in 15 years.

Standard Chartered said official figures showed 17 months stock of apartments in Tier 1 to Tier 3 cities, which cover China's major metropolises, including Beijing and Shanghai.

"The momentum is clearly negative. This downturn appears worse than previous episodes - the scale of oversupply is likely to be larger, and policy makers are understandably more hesitant to step in with immediate support," Standard Chartered economists said in a report.

The government is still trying to deal with the hangover of a 4 trillion yuan stimulus package implemented in 2008-2009, which insulated China from the global crisis but also created piles of local debt and record house prices.