According to a report by Goldman Sachs Group Inc & Gao Hua Securities Co Ltd, the financial situation of 110 developers listed on the A-share market deteriorated in the first quarter. Those woes will have an impact on apartment prices during the second quarter, the report said.

About 30 percent of bank loans are estimated to be tied to real estate, and land and property are used as collateral for a majority of loans, according to Roubini Global Economics LLC.

April sales adding fuel to fears of property bubble

Nobody's home in 10.2m apartments, survey finds

The restructuring of Chinese homebuilders that began early this year will force uncompetitive developers out of the market and help mitigate oversupply risk in the long term, according to a report by Fitch Ratings Inc.

China's property sector has been experiencing weak sales and negative sentiment, along with tighter onshore funding and polarization among cities. This restructuring process has led to the separation of stronger developers from weaker rivals, the credit ratings agency said.

"Given that nationwide housing demand is still strong and rated developers only account for about 33 percent of market share, there is still room to grow for stronger-rated developers after restructuring and consolidation."

James Shepherd, head of research for greater China at Cushman & Wakefield Ltd, agreed with that assessment.

"We anticipate more consolidation in this lackluster market. Major listed developers will outperform in this volatile environment, with their solid financial positions and access to varied financing channels," said Shepherd.

A case in point is Shanghai Greenland Group Co, which recently announced plans to list a unit in Hong Kong this year as it seeks to enter the United States property market.

The company joins other large domestic developers such as China Vanke Co and Shimao Property Holdings Ltd that are increasingly tapping foreign countries for new residential property ventures.