Poly Real Estate Group Co., China's second-largest developer by market value, said its contracted sales fell 39 percent in October from a year earlier. Barclays Capital estimates home prices may decrease by 10 percent to 30 percent in the next year. Home prices fell in 33 of 70 cities in October, government data shows.

"We think a sharper deceleration in property investment is the biggest risk to China's economy," Johanna Chua, Hong Kong- based chief economist for Asia at Citigroup, said in today's report. "But a hard landing can be averted in the near term with sufficient policy flexibility to provide offsetting support for growth, especially on the fiscal front."

UBS' Wang said the government may relax fiscal policy and bank lending quotas next year. She estimates additional fiscal spending of about 1 percent of gross domestic product over a 12- month period and that the central bank will raise its new lending target for 2012 to 8 trillion yuan ($1.25 trillion) from
7.3 trillion to 7.4 trillion this year.

Eoin Treacy's view Sentiment towards just about all stock markets has deteriorated sharply over the last month as many posted double digit declines. China remains at the forefront of investor fears as it continues to focus on bringing down the cost of housing. It is also well to remember that the Chinese more than anyone have a vested interest in avoiding a hard landing. This will require a moderation in its tightening bias and a change of focus in terms of supporting the consumer. There are positive signs that these changes are beginning to take shape.

The Hang Seng China Enterprises Index broke downwards from its almost two-year congestion area in August, found support in the region of 8000 and rebounded to test the lower side of the overhead range and the 200-day MA. It retraced a little more than half of the initial rally over the last few weeks and has steadied above 9500. A sustained move below that level would be required to check current scope for some additional higher to lateral ranging.