Li Yujia, chief researcher at the residential policy research center of the Guangdong Planning Institute, said the suggestion to scrap home purchase restrictions may unleash a certain amount of demand, but the effect of any such decision on demand recovery will not be long-lasting.

"The home purchase restrictions were originally introduced to prevent speculative investment. So, lifting of such restrictions might merely allow high-net-worth individuals to buy more apartments, without really creating a positive impact on underlying inelastic demand and the demand for better homes from existing homeowners," Li said.

Considering that transactions for new homes have improved over last year, and with the country's leadership keen that the real estate market should neither rebound too swiftly nor cool down too much, policy adjustments should not be too drastic, Li said.

China, he said, is implementing a new development pattern for the industry, under which priority should be placed on restoring rational demand for homes for living in (rather than speculative investment).

Yu Yifan, 31, a white-collar worker at a startup in Shanghai's Lingang Special Area, recently bought a 120-square-meter apartment in the area, after a house hunt that stretched for more than six months. "I have been working at Lingang for about eight years and always wanted to own a home here."

Yu typifies China's urban homebuyers, a group that accounts for inelastic demand. "Many people said Lingang is too far away from the city center of Shanghai, but I think differently. Over the past few years, I have seen the area's infrastructure improve rapidly, and both business and living environments are becoming better and better. I see Lingang as a place with great potential and bright future."

Brodie said so far this year, hundreds of policies have been introduced in the residential market. Many of these policies are city-specific, but the common goal is to stabilize the overall market.

"Any future policies should be a combination of consistent short-term and long-term policies that are city-specific, in order to avoid overheating or its opposite, but at the same time guide the market toward high-quality and healthy development coupled with sustainable market growth," said Brodie.

What is needed for the healthy development of the real estate market is neither overheating nor an abrupt downturn, industry experts agreed. Excessive relaxation of restrictions, they said, will lead to disorderly inflows of capital, while excessive tightening will cause a sudden downturn. What is needed is consistency in policies to promote sustainable market growth, they said.

During a news conference of the State Council Information Office on July 14, Zou Lan, head of the monetary policy department at the PBOC, made it clear that there is still room for optimizing the existing local property policies that vary from city to city.

Zou's remarks sent a positive signal that more policy adjustments that are more accurate and precise than those of the past may be expected, said Chen with the China Index Academy.

However, Zou's remarks also suggested that the policy alterations will be based on existing measures; therefore, all the parties concerned in the real estate industry should keep their expectations reasonable, Chen said.

Sheng at JLL China emphasized prevention of financial risks, including improvement to the balance sheets of good-quality property developers, thus guiding the sector's capital flows, investment, mergers and acquisitions back on to the right track.

"Improvement of property developers' financing and investment conditions will depend on the consistent and accelerated recovery of property sales, so as to bring about a virtuous cycle in the sector's development," said Sheng.

Brodie with Cushman & Wakefield said the recovery in the residential market will depend highly on government policies and the continued recovery of the overall economy in the second half. If policies are executed well and economic growth remains steady, then steady property demand would deliver sustainable growth of the residential market.