Prospective homebuyers at a realty expo in Shanghai check the fine-print of a marketing brochure for a modern housing estate. [Photo/China Daily]

To buy or not to buy－that's the question for Hu Chengru, 39, a prospective homebuyer in Shanghai.

Hu had realized some 3.6 million yuan ($529,000) from the sale of her old apartment earlier this year. Now, she would like to buy a more spacious flat for "upgrading" the quality of her life. But she is still waiting for the right time to buy.

"Every day, I ask whoever I think may have some knowledge about the real estate market: 'Will the home prices drop in Shanghai?'

"Their answers have ranged from 'Definitely not' two months ago to the currently 'Perhaps'. But after meeting so many homebuyers, agents and reading so many articles, I've reached my own conclusion. The prices won't rise as quickly as they used to be, but they are not likely to drop either, because there are so many people like me wanting to buy a home. The demand is so huge," said Hu.

In key cities like Beijing and Shanghai, home prices are less likely to drop significantly, but the pace of rise has slowed, said analysts.

"One major reason behind the little chance of a sharp fall in home price in key cities is the great demand as reflected by demographic data. Some 70 million residents are entering the age of getting married, having children or having a second child, and urbanization-related migrants also need housing in cities. Without new developments, some cities may exhaust their current inventories in just nine months. Supply of land is limited. Considering all these factors, home prices in key cities are not likely to drop significantly," said Liu Ligang, economist with Citibank China.

The average price of apartments may not drop significantly but transaction volumes may shrink up to 40 percent in the first half of 2017, in immediate response to measures against speculative buying, said Zhang Yu, analyst with CICC Ltd.

"In first- and second-tier cities, demand from speculative buyers has been curbed after policy tightening, so transaction volumes will shrink, but the average price won't decline because land prices are high, and demand is still solid and increasing while supply is short," said Zhang in a research note.

In third- and lower-tier cities, particularly those neighboring key cities, prices may rise slightly around 10 percent, which would be natural and rational, said Zhang.

A research note from Guotai Junan Securities cited financing conditions as a factor for stable growth of the real estate sector.

The note further said monetary policies have not been very tightened, which gives the real estate sector a spacious room to grow. Also, as a pillar of economic growth, real estate is not likely to face significant downward pressure if the overall economic growth is positive.

Economists said that uncertainty remains, including changes to policies, the pace of urbanization and investment growth. Market corrections, if any, would be mild.

Wang Tao, economist with UBS Securities, said policymakers would not like to see significant decline in the real estate market because that would impact overall economic growth.

"Policies have already been introduced to adjust and control the real estate market. They are mild and are customized for each city. Inventories country-wide have been lower than the level two years ago. Construction and investment recover mildly and slowly, so even if the real estate market sees pressure, it would not decline as it did two years ago," said Wang.

Real estate agents said they have observed that both homebuyers and pre-owned apartment sellers are becoming more "rational".

"Buyers and sellers have both sensed that the market situation is changing. Policymakers want to squeeze out bubbles and cool down the overheated market, and have discouraged many speculative buyers. Only those with a genuine need are looking to buy now," said Luo Chuanhu, Shanghai-based agent with HomeLink Real Estate.