This will come on top of a cut already announced on property deed taxes and other fees. The government is also expected to ease the burden on smaller property purchases and build more low cost housing.
The property industry is regarded as a vital part of the strategy to halt the decline in China's economy but analysts fear things will get worse before they get better.
The latest figures from the National Bureau of Statistics just released show that the floor area of residential properties sold in the first 11 months of the year fell 18.8% from a year earlier, while their sales value was down 20.6%.
Unsold residential property amounted to 70.8 million square metres (762 million square feet) at the end of November, up 22.9% from a year earlier.
China's property outlook index, which covers price and investment trends in the sector, dropped to 98.46 in November from 99.68 in October, falling further below the boom-bust line of 100 that represents positive conditions.
This was the lowest reading since February 2003, the last month for which data on the index is available. The index has been steadily falling since it peaked at 106.59 in November 2007.
Property deed tax, business tax and income tax are major hurdles for new home buyers and also in second-hand house deals, explained Yang Shaofeng, Managing Director of Conworld, a Beijing-based property broker.
The taxes on buying a second-hand apartment could be around 7% percent or even near 10% percent if the property is larger than 140 square meters.
'We expect that the Ministry of Finance, State Administration of Taxation and the Ministry of Housing and Urban-Rural Development may reduce the taxes soon,' Yang said.
The China Real Estate Association has submitted a proposal to the National Development and Reform Commission, the top economic planner, seeking more favorable policies to help the troubled sector.
Zhu Zhongyi, vice-chairman of the China Real Estate Association, said the proposals include cutting income tax for real estate firms, encouraging local governments to buy residential buildings to house low-income families and urging banks to finance quality property projects.
