The country's property market has gotten off to a slower start this year than in 2013.
The number of homes sold in the first quarter in tier-one cities – Chinese property market jargon for the major cities of Beijing, Shanghai, Shenzhen and Guangzhou – was more than 40 percent lower than during the same period last year, data released by China Index Academy on April 1 shows.
Transactions in the capital fell the most among the four cities, by 51 percent, followed by Guangzhou (43 percent), Shenzhen (38 percent) and Shanghai (36 percent).
Despite this, home prices in three of the four first-tier cities rose from the previous month. Home prices in Shanghai increased the most, by 0.99 percent. Beijing and Shenzhen also saw prices go up, by 0.93 percent and 0.77 percent respectively. The average price in Guangzhou fell by 0.29 percent.
Home prices in the large cities will increase by around 10 percent this year mainly because credit is harder to get than in recent years, Zhu Haibin, chief economist at JPMorgan China said in a recent report.
The property markets in second-tier cities – provincial capitals and the larger cities in each region – were also cooler in the first quarter than they were in the same period last year. The number of apartments sold was down 25 percent, the real estate research institution CRIC Group said in a report.
The number of transactions usually falls in January and picks up in March, the report said, but the property market is off to a difficult start to 2014, CRIC Group said. Many major developers have set moderate targets and cut the number of new projects, indicating lower expectations for growth in the upcoming months, CRIC said.
Another reason for the slow first quarter is a call for tighter regulations on the property market at the annual parliamentary meeting in March, it said.
Premier Li Keqiang said the government would use different approaches to different problems in the property market. He said the goal in big cities was to rein in prices, but in smaller cities it was to address oversupply.
Oversupply has become a major problem facing smaller cities, Ren Xingzhou, an analyst at the Development Research Center of the State Council, wrote in a report.
The average home price in Beijing, Shanghai and Shenzhen this year is more than 30,000 yuan per square meter, but the figure for third-tier cities – those in the country's western regions – was only 7,331, data from property market website Soufun.com said.
The gap will continue to widen and pose a systematic risk to the property market, Ren said. He warned the government against using stimulus to boost spending on homes. Improving property tax schemes, building a complete and updated database on property information and enhancing land regulation are the long-term solutions to the problems, he said.
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