In June, the PBOC made the first adjustment in 10 months to loan prime rates by cutting the over-five-year loan prime rate, on which many lenders base their mortgage rates.

"These measures mainly focus on lowering the cost of buying homes as well as improving the balance sheet of quality property developers, as part of efforts to defuse financial risks of the real estate sector and assist the property market to form a virtuous cycle," said Chen Wenjing, director of research with the China Index Academy.

"At the local government level, policies related to property had been adjusted in over 130 Chinese cities as of June 25. These policies included easing home mortgage measures, lowering down payment, and reducing home purchase restrictions. The policy adjustments are playing a bigger role in supporting the home market," said Chen Xiao, senior analyst with the Zhuge Real Estate Data Research Center.

Although industry experts agree that policies need more fine-tuning to back the property market recovery, many of them urge striking a fine balance to stop the sector from either getting overheated or taking a drastic downturn.

"Any policy related to the regulation of real estate needs to be implemented under the premise' housing is for living in, not for speculation'," said Shaun Brodie, head of research content for China with Cushman & Wakefield, an industry consultancy.

"Additionally, it is necessary to take into account the specific situation of each city and then carefully make customized policy tweaks to ensure sustainable growth within the housing market of a particular city in question," Brodie said.

Earlier this year, with the full relaxation of the COVID-19 pandemic control policies, and given the long-standing backlog of demand for housing, the new homes market recovered, especially in cities that have long been hot spots for homebuyers. However, after the sales boost, demand gradually cooled, Brodie said.

Chen Sheng, president of the China Real Estate Data Academy, said the lifting of home purchase and mortgage restrictions in firsttier cities will likely pull buyers away from neighboring areas, affecting the housing market in smaller places.

Market insiders said the new homes market in China's first-tier cities — Beijing, Shanghai, and Shenzhen and Guangzhou in Guangdong province — showed strong resilience in the first half.

Brodie said China Real Estate Index System data showed the four first-tier cities recorded sales of 1.55 million new homes in the first half, up nearly 22 percent year-on-year.

Meanwhile, key second- and third-tier cities, with the exception of a few hot spot cities, witnessed a relatively sluggish new homes market, with transactions in the second quarter showing a mild downtrend compared to the first quarter.

With calls for eliminating home-buying restrictions growing nationwide, the market should be wary of certain risks, said Chen Xiao from the Zhuge Real Estate Data Research Center.

"On the one hand, lifting of restrictions may attract speculators back to the housing market, and drive up home prices. On the other hand, any changes without more scientific and reasonable policies related to home purchases or mortgage requirements, may disturb the current market order," Chen said.

But Chen also noted that considering the recent market performance, more effective policies are expected to boost market confidence.