"Historically, sale volume always picks up with credit and with various local governments signaling support by relaxing Home Purchase Restrictions and peak property season starting in September, we believe sales volume will accelerate and price/margin will stabilize," she said. "Earnings visibility will improve and the sector should re-rate."
In a note Friday, CLSA upgraded Hong Kong-listed China property player Agile Property to Buy and raised its target price 70 percent to 8.50 Hong Kong dollars, noting that if the stock rises to that price, it would still only be trading at 5.5 times 2015 earnings. The stock was trading around 6.56 Hong Kong dollars intraday Friday.
China's house prices increased at double digit rates throughout most of last year, but began cooling towards the end of 2013 as government tightening measures started to take effect.
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In June, average new home prices in China's 70 major cities fell 0.5 percent on a month-to-month basis, marking their second consecutive monthly drop after May's 0.2 percent decline, although Reuters calculations indicated prices rose 4.2 percent year-on-year after rising 5.6 percent in May.
Some are expecting the physical property market could see a sharp correction in the months ahead, but still like some of the sector's stocks.
"It is too extreme and premised on too many misunderstandings to assume the China property market is 'game over' forever," Citigroup said in a note Monday, adding it sees opportunities amid the pessimism.
Read More China property primed for shake-up as downturn drains cash
Over the next two years, Citigroup expects average selling prices in the physical market will fall around 20 percent in tier one and two cities and 30 percent in tier three and four from their levels at the end of 2013, with national contracted sales volume to fall 10 percent and 20 percent on-year this year and next respectively.
But when it comes to sector stocks, while they are likely to range-trade for the rest of the year, "there is upside more than downside," it said, with share prices already factoring in the price declines. It noted that sector stocks are trading at around 7.2 times 2014 earnings, compared with a historical average of 9.1 times.