The sudden fears gripping the Chinese stock market over a cooling property sector might be exaggerated, but not the urgency of defusing a housing bubble that could hurt the country's long-term growth potential.

Although the overall performance of the property sector has been stronger than most developers expected, the little confidence that investors display in real estate speaks about the risks that runaway house prices might pose to the world's second-largest economy.

Official data released on Monday show that six of the 70 major Chinese cities saw a month-on-month drop in new home prices last month, while only two did so in December.