More than a third of major cities saw property prices fall in February, on a yearly basis, and analysts said the trend will continue amid government curbs.
Of the 70 large and mid-sized cities tracked by the government, 27 saw new home prices fall year-on-year, compared with 15 cities in January, the National Bureau of Statistics (NBS) said on Sunday.
On a monthly basis, new home prices dropped in 45 cities, down from 48 in January. Four cities witnessed a slight increase in prices while 21 cities saw prices unchanged, according to the NBS.
"As the government reiterates its determination to keep rigorous property measures in place, property developers will offer greater discounts," said Carlby Xie, head of research at the real estate consultancy Colliers International (Beijing).
Premier Wen Jiabao said on Wednesday that property prices were still "far from a reasonable level", and that efforts to regulate them will continue.
Analysts expect that tightening measures could last much longer.
"We do not expect the government to tighten policies further. Premier Wen's statement confirms expectations that the current policy restrictions will remain largely unchanged this year," Wang Tao, head of China economic research at UBS Securities Co Ltd, said.
A range of measures aimed at curbing runaway property prices have been introduced over the past year, such as bans on buying second homes, hiking minimum down-payments and introducing property taxes in select cities.
"At the margin, however, we think the recent relaxation of lending for first-time mortgages and to developers for normal commodity housing constitutes a 'fine-tuning' of property policies," Wang added.
For Xie, from Colliers, a 10 to 20 percent property price drop could be on the cards before stabilizing.
"I believe the best buying opportunities will emerge between now and the end of this year," Xie added.
According to an online survey by SouFun Holdings Ltd, the country's largest real estate website, around 50 percent of netizens said prices will only be affordable by falling at least 30 percent.
The average sales price of projects developed by the country's leading real estate firms was down some 10 percent year-on-year in the first two months, according to the National Business News.
China Vanke Co, the country's largest publicly traded developer, said contracted sales in the first two months fell 27 percent from a year earlier to 19.05 billion yuan ($3 billion).
"Many developers in China may be at an increased risk of refinancing because of weaker property sales, high funding costs and tightened liquidity," said Bei Fu, a credit analyst at Standard & Poor's.
Though some analysts worry that slumping home prices could hurt growth in the world's second-largest economy, Deutsche Bank just raised China's 2012 GDP growth forecast from the previous 8.3 percent to 8.6 percent.
"China's exports and small business are outperforming our expectations," said Ma Jun, China Chief Economist of Deutsche Bank Hong Kong.
"And the economy is more insulated from real estate risk than market perception."