(Editor: Leona)

Scholars of Chinese Academy of Social Sciences expect first-tier cities to join others this year in lifting the housing purchase limit to shore up property market.

The five cities that still have such restriction, namely Beijing, Shanghai, Guangzhou, Shenzhen and Sanya, will likely relax the limit, as home price continues to slide, reported People's Daily on Monday quoting Ni Pengfei, director of CASS center for city and competitiveness.

In the long run, Ni said, Chinese property industry will follow an L-shaped development pattern, which means slowdown in the sector would gradually bottom out and medium growth rate will the "new norm."

"China will continue to slow in 2015 as the housing slump weighs on the broader economy," said Alaistair Chan, economist of Moody's Analystics, in a note on Tuesday, adding that a sharper housing correction is the biggest downside risk to China's economy.

To avoid a hard landing in the sector, the Chinese government has unveiled a series of measures, including lifting home purchase restrictions and easing mortgage rules. In addition, the central bank cut benchmark interest rates in November for the first time in more than two years to reduce financing costs.

The property market has shown signs of stabilization since the rate cut with signs of slight recovery.

Price dropped month-on-month in 67 of the 70 cities tracked by the government in November, compared with 69 in October, with the largest price fall among them dropping from 1.6 percent to 1.4 percent, latest figures released by the National Bureau of Statistics showed.

However, cooling demand and serious oversupply are expected to plague the real estate market and compromise the government's efforts, said Ni Pengfei in a yearly outlook report.

He added that the sector will continue to diverge, as housing market among first-tier cities will more likely rebound in the second half this year, and third- and fourth-tier cities will need more time to de-stock and adjust.

China's upbeat housing sentiment rolls into 2015

China's stronger than seasonal property sales in December point to a recovery in market sentiment thanks to looser housing and monetary policy, with the upbeat momentum expected to swing into 2015, analysts said.

But with oversupply still looming large, any recovery especially in home prices is likely to be slow, tempering hopes that housing could provide a badly needed boost to the Chinese economy as it struggles to overcome the slowest growth since the global financial crisis.

"December sales figures were a positive surprise because they were better than the September and October figures which were traditionally the golden and silver month," Macquarie analyst David Ng said. "They're stimulated by loosening policies."

Ng said however that sales would see slow, healthy growth rather than a big rebound.

China's top listed residential developer China Vanke reported a 129 percent surge in sales in the last month of 2014 from a year earlier, while sales over the same period for mid-sized Country Garden leapt 167 percent.

Sixty percent of China's major cities recorded a rise in sales volume in December, according to housing data researcher CRIC, with first-tier cities rising the most, up more than 15 percent from November and over 45 percent from a year earlier.

China has put in place a series of stimulus measures including interest rate cuts to spur home buying demand and market liquidity since the third quarter.

Betting on even looser policy to come, investors have been snapping up property shares, pushing the property sub-index in Shanghai to its highest since February 2008.

But housing supply remains excessive despite the pick-up in sales, with only two major cities out of 23 seeing a decline in inventory at the end of December, CRIC data showed.

"Inventory is high. We can't raise prices until after the market digests them, " said a chief executive officer of a developer based in southern Guangdong province. "The sales went up but prices didn't; it won't be easy for us to raise prices."

China's new home prices fell for the 11th consecutive month in November by an annual 3.7 percent, the biggest drop since 2011. Property sales hit 132.2 million square meters, the highest level in 11 months, though still down 11 percent from a year earlier.

The Chinese Academy of Social Sciences (CASS) said in a report last month it expects home prices in first and second-tier cities to continue to fall in 2015 on high inventory, while prices in third and fourth-tier cities would stabilize.

In terms of full-year results, a breakdown of sales figures also underscores the increasing polarization between large and small players, leading to quicker consolidation. CASS forecasts that half of the developers will "vanish".

China has an estimated 50,000 developers although only 80 account for close to 40 percent of market share.

The largest companies tend to grow faster. Seven developers with over 100 billion yuan in sales, including Dalian Wanda Commercial Properties and Evergrande Real Estate, on average sold 24 percent more in 2014, while those with 30-100 billion sales grew at 14.6 percent, according to housing researcher China Index Academy.

Unlisted state-backed Greenland Group said its 2014 contracted sales jumped 50 percent from a year earlier to 240.8 billion yuan, topping China Vanke for the first time.