According to Macdonald, factors like tough restrictions on home purchases and high home prices will continue to weigh upon these markets.
"Weak volumes and softer pricing does not necessarily represent a lack of demand but an inability to convert that demand into a sales transaction. Markets remain generally stable and the future direction will be largely determined by changes to existing policy frameworks as well as monetary policy," he said.
Prices and transaction volumes of pre-owned homes in both Beijing and Shanghai declined. In the capital, an average home transaction took 30-odd days in April 2017 but extended to nearly 80 days in February, with homes traded at a lower price level than that of January 2017.
In Shanghai, 492,900 square meters of newly built homes were traded in March this year, up 143 percent from February, the month of weeklong Spring Festival, but dropped 31 percent from a year ago, according to Chinese residential property agency Shanghai Lianjia.
Although the transaction volume in Shanghai's new home market was approaching a six-month high, this is still the lowest transaction volume for March since 2012, Shanghai Lianjia said.
"We project new home trading in Shanghai in 2018 will outperform the previous year, and the increase in new supply is the main driver," said Zhou Jing, head of project sales, JLL Shanghai.
Zhou said demand contained in 2017 will be released somewhat as there are quite a few new residential projects that will likely boost supply this year.
The cooling of first-tier cities' home market was attributed to a string of factors, including the tightening policies on home-buying, loan requirements, and the increase in land supply since the second quarter of last year, said the SUFE report.
Despite a 142-percent month-on-month increase in sales volume of pre-owned apartments in March to 17,370 units, the figure remains the lowest in six years for March, and 7.06 percent lower than that of last year, according to a research report from the Shanghai Existing Property Index Office.
"We observed pre-owned home prices have started to soften, and the wait-and-watch attitude of homebuyers gave them more room for bargaining," said Zhou.
