It is far too early, however, to claim a substantial price adjustment will ensue that will safely defuse the housing bubble. Policymakers must be ready to resist both furious complaints by developers and premature calls for policy relaxation in the face of a possible economic slowdown later this year.

Two months after the launch of a slew of measures to cool the sizzling property market, housing prices in major cities grew at a slower pace for the second consecutive month. The average home prices in 70 large and medium-sized cities rose 11.4 percent year-on-year in June, 1 percentage point lower than that of May and down 1.4 percentage points from that of April.

More important, on a monthly basis, June property prices in these cities fell 0.1 percent compared to May, probably marking a turning point in the overall property price trend.

If the trend is consolidated, China's property prices may decline at least for several months until the turn of the year.

Under such circumstances, many property developers will face reduced cash flow from slow sales and financing woes.

Some of them will doubtless try to oppose tightening measures by overstating the danger of a property market collapse.

Besides, the uncertain nature of global recovery has also given rise to fears that efforts to cool the property market might limit China's room for maneuver if its growth prospects turn dim amid a double-dip of the world economy.

These are all justified concerns. The country cannot afford to let the property market go bust. Policy back-pedaling may risk repeating previous policy failures due to half-hearted tightening measures that only sent housing prices through the roof.

Housing prices may have leveled off, but adjustments to the property market are far from done.

It is far too early, however, to claim a substantial price adjustment will ensue that will safely defuse the housing bubble. Policymakers must be ready to resist both furious complaints by developers and premature calls for policy relaxation in the face of a possible economic slowdown later this year.

Two months after the launch of a slew of measures to cool the sizzling property market, housing prices in major cities grew at a slower pace for the second consecutive month. The average home prices in 70 large and medium-sized cities rose 11.4 percent year-on-year in June, 1 percentage point lower than that of May and down 1.4 percentage points from that of April.

More important, on a monthly basis, June property prices in these cities fell 0.1 percent compared to May, probably marking a turning point in the overall property price trend.

If the trend is consolidated, China's property prices may decline at least for several months until the turn of the year.

Under such circumstances, many property developers will face reduced cash flow from slow sales and financing woes.

Some of them will doubtless try to oppose tightening measures by overstating the danger of a property market collapse.

Besides, the uncertain nature of global recovery has also given rise to fears that efforts to cool the property market might limit China's room for maneuver if its growth prospects turn dim amid a double-dip of the world economy.

These are all justified concerns. The country cannot afford to let the property market go bust. Policy back-pedaling may risk repeating previous policy failures due to half-hearted tightening measures that only sent housing prices through the roof.

Housing prices may have leveled off, but adjustments to the property market are far from done.