Mainland shares touched a three-month low of 2,227 earlier in the session but managed to close off lows after a rally in real estate stocks limited losses.
China's biggest cities unveiled fresh property measures over the weekend in a bid to cool overheating in the sector but stocks dismissed the news with China Merchants Property surging nearly 5 percent, and Poly Real Estate adding 3 percent.
Analysts attribute the rise to the fact that many had priced in the tightening measures after last month's property clampdown. However, some experts are wondering why the first round of curbs did not scare investors off.
"Where are you going to put your money if you're in China? You can't put int a bank account or the stock market. It's going into real estate so until there are more investment options in China, there is no safety net," said Tony Nash of IHS Global Insights.