China's attempts to deflate its property bubble come at a perilous time.
Fears that the euro might collapse, unleashing a tsunami of financial and economic disruptions around the globe, have added urgency to concerns that China's campaign to cool overheated housing prices may go too far.
As economic growth wanes, Beijing has begun easing tight credit policies meant to cool inflation but China's leaders are insisting there is no leeway for loosening curbs on the housing sector.
"The decision has been made that there will be no more property bubble," said Andy Xie, an independent economist based in Shanghai.
Measures to control the market _ such as limits on home purchases and high downpayments to qualify for mortgages _ are at a "critical period," Vice Premier Li Keqiang said last month, stressing a need for more progress on controlling prices.
Stalled transactions and falling prices in major cities such as Shanghai have many in China wondering how long the deep-freeze will last. The impact of China's property chill could stretch far beyond its crowded cities. With growth heavily dependent on construction and related industries, the slowdown already is sapping demand for domestic and imported products and materials and dampening Chinese investors' interest in buying properties overseas.
Since companies have invested borrowed funds in property projects, troubles in real estate will put added stress on banks, said Charlene Chu, an analyst with Fitch Ratings. "This has pushed the developers into a very tight position," she said. "We need to worry about some significant asset deterioration."
Nobody is predicting a meltdown akin to those that led to the global crisis: most Chinese homeowners hold relatively modest mortgages, and demand in the long run will be sustained by demand for better, more spacious housing among increasingly affluent families.
Apart from the global risks, deflating the property bubble is a tricky gamble for the communist leadership given its reliance on rising living standards for its claim to power.
Homeowners whose life savings are in property are seeing the gains they once took for granted evaporate as developers are offering steep discounts on new apartments.
Outraged buyers who recently bought at higher prices are protesting, in one case smashing fixtures at a major developer's offices to vent their anger. Those owners of not-yet-built apartments argue they are being cheated. The property companies say they are just abiding by market conditions.
"It is just unfair," said a 29-year-old software developer. He would only give his last name, Li, because he was involved in some of the protests after prices were cut by 20 percent since he handed over a chunk of his and his parent's savings for an apartment in August. He won't even be able to move in until next year.
"Why do those of us who really need the housing have to be hurt?" Li said.
Those wanting to buy homes, meanwhile, are waiting for prices to drop still further.
Like many in China, Xu Zhengjuan has mixed feelings. The 48-year-old barber shop owner plans to buy an apartment for her son, who soon will be graduated from university.
"It could be a bargain to buy it now, since I need to buy one anyway," said Xu. "But I am also worrying about what I'll do if the prices keep falling after I buy it."
"I'm still watching to see how it will go," she said.
The market seems to have reached a turning point, at least in the biggest cities. New home prices fell in the 10 biggest Chinese cities in November, according to a monthly index compiled by the China Index Academy.
In Shanghai, the decline was 0.5 percent from the month before.
Still, prices have not fallen much overall, with the average decline only 0.3 percent in the 100 biggest cities, to 8,832 yuan ($1,400) per square meter. In the top 10 cities, average prices fell only 0.4 percent, to 15,663 yuan ($2,472) per square meter.
The curbs are just beginning to let some air out of the property bubble, the Communist Party newspaper People's Daily proclaimed in a recent commentary that warned the "time for making easy money is over."
"It is now winter in the real estate market, and 20 percent off or even 50 percent off eventually may be seen in the big cities," it said.
In a recent report, Barclays Capital forecast that prices could drop by 30 percent before stabilizing once the government begins to ease the curbs it used to bring the market under control as prices shot out of reach of many city dwellers.
China's residential property market was only launched in the mid-1990s, as state-owned companies and government agencies began allowing employees to buy housing assigned to them at subsidized rates.
Thanks to those reforms, over two-thirds of urban families own their own homes, and many have bought more apartments as investments, expecting to earn much higher returns from property than from the paltry interest rates paid on bank deposits.
But many younger Chinese have been priced out of the market as their incomes, though mostly rising, haven't kept pace with soaring costs for housing and other necessities.
Having prices fall too far, or too fast, angers many others _ and may undermine the finances of businesses and local governments that are heavily invested in property projects.
In the meantime, real estate developers are giving up land parcels they can no longer afford to develop, and in some cases, selling out to larger property companies, or "cutting off their arms to survive" as industry insiders put it.
Some of the slack in demand left from the weakening in commercial property is being absorbed by the push to speed up construction of what the government calls "affordable" housing _ in contrast to the expensive high-end apartments and villas that most developers have concentrated on due to their relatively high returns.
The easing in property market controls, when it does come, will likely be piecemeal and low-key, as is the case for most Chinese economic policy changes, says UBS economist Jonathan Anderson.
Despite its relatively short history, China's property market has been through several booms and busts, the most recent in 2008, before a multibillion dollar burst of recession-fighting stimulus spending set off the biggest construction spree so far.
Dai Qi, a foreign trade company employee living with his parents who owns two apartments, is taking the long-term perspective.
"I'm not worried if prices go up or down. If it goes up, that's great because it will be more valuable. If it falls, I won't lose money since my parents bought the apartments in 2001, when they were much cheaper," he said.
Researcher Fu Ting contributed to this report.
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