Experts believe banks are now quietly calibrating the balance of their business, after a decade of lucrative co-existence with the booming and then sizzling property market. In order to ease liquidity pressure, banks are resorting to inter-bank businesses and wealth management products.

Home prices 'will stay under pressure'

Vanke says property sector's 'golden era' over

Tight credit also causes headaches among developers, especially smaller ones, as they see timely, low-cost cash flows as lifeblood.

They are usually not favored by banks in terms of development loans, and are also strained by fewer home loan issuances. Data has showed that down payments and mortgage loans could account for as much as 40 to 50 percent of developers' revenues on average.

According to a report on China's real estate market by Bank of America Merrill Lynch Global Research, a further slowdown is inevitable in China's real estate market and there will be a sharp rise in the number of small developers hit by financial troubles.

However, it ruled out a systemic crisis in the sector because it said that the real problem is misallocated supply due to the hukou, or Chinese household registration system, and the rural land system, rather than overinvestment.

It noted that new urbanization, driven by reforms to land ownership and the hukou system will help correct the distorted housing supply and demand in China.