Li's team previously concluded in a report that housing demand will increase at a much slower pace after 2012 and demand will continue to slide under raised mortgage rates and an upcoming property tax.

Li warned about an "important change" expected to take place in China's property market after its breathtaking growth of more than a decade.

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A declining market outlook was also linked by some experts to rising mortgage rates, with nearly 90 percent of 69 bank branches in 22 Chinese cities no longer offering preferential mortgage rates to first-home buyers, according to the China Real Estate Information Corp.

"We have to watch closely the trend of price differentiation in different cities, take precautions and note the role of the government in real estate control," he said, adding he believes it is highly unlikely China's property market can maintain the rises it witnessed in previous years because the environment for industrial development and the inner drive for expansion have both been altered.

Jia, from the finance institute, suggested speeding up legislation regarding property tax because more people are looking forward to the government expanding its trial to regulate the market.

In the two cities where property tax has been levied as a pilot program since 2011, individuals in Shanghai are taxed at a rate of 0.4 percent or 0.6 percent of the total price of their property annually if the housing area for each person exceeds 60 square meters. In Chongqing - the other trial city - the tax is levied only on high-end properties, such as villas, at a rate between 0.5 percent to 1.2 percent of the property price on an annual basis.

"We have to be prudent about bringing more cities into the trial and be especially cautious when drawing a watershed between homes where a tax is beneficial and those in which it isn't. Any expansion of the trial should be aimed at regulating the high-end property market, instead of levying taxes on all properties alike," he said.

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