Official figures from the latest index from the National Bureau of Statistics show that the volume of real estate sales in the first quarter of 2009 rose 8.2% from a year earlier.
While overall average prices are not improving, property prices in urban areas rose 0.2% in March putting an end to seven consecutive months of price falls.
Meanwhile, the value of nationwide property totaled $74.5 billion in the first quarter, up 23.1% from a year earlier
But experts are warning that voumes are up because prices are falling and they need to go down even futher. 'Property sales are in an early recovery in major Chinese cities as prices drop to an acceptable range for some buyers,' said Xing Ziqiang, an economist at China International Capital in Beijing.
'However, property prices may need to drop another 5 to 10% to ensure a sustainable recovery in both sales and property investment,' he added.
Indeed China's property market could fall by 40% to 50% in value during the next two years, as transaction activity subsides and as the export sector continues to slump, according to another economist.
Cao Jianhai, a professor at the Chinese Academy of Social Sciences, said that the current rebound in the property market was unsustainable and driven by a flood of liquidity and fraudulent activity rather than real demand.
He explained that this would not be immediate and that housing prices were likely to collapse next year, followed by many years of stagnation.
Cao also pointed out that the average property prices are now 10 to 12 times the average income. As a result, about 60% of a homebuyer's monthly income must to go to mortgage repayments.
Vanke, China's biggest listed property developer, warned that although there are some signs to be positive about, especially in the large urban areas, the state of the real estate market is still fragile.
The company confirmed that its property sales in March fell 8% from a year earlier to $898.3 million, and said that the market remained weighed down by weak prices.
However, its sales figures were up 57.8% from February while the volume of space sold during the month rose 0.5% from a year earlier, and 39.8% from the previous month.
Vanke Executive Vice President Shirley Xiao said that property sales in China' big cities had shown strong growth in the first quarter of this year, boosted by price cuts and cheaper mortgages, although he described the market as still fragile.
