The current adjustments of housing prices and structural changes in housing demand are good for China's financial sector, but regulators expect to see a smooth transition rather than drastic adjustments that have a huge economic impact, one of China's top financial regulators said on Wednesday.

"Nowadays, housing loans account for a large part of total loans at large commercial banks. We have repeatedly reminded banks to pay attention to risks, as many people borrow to buy homes for investment or speculation. If housing prices decline or some other problems emerge, a huge financial crisis will hit markets," said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, at a news conference held by the State Council Information Office.

As housing prices fell last year, a fundamental twist of housing market bubbles occurred and now the market is not as active as it used to be. However, homes, especially rental housing, and home decorations are still needed. Therefore, it is meaningful to provide financial services in this regard, Guo said.