To begin today with a check on China’s real estate market, both Shanghai and Shenzhen say their home prices are now feeling the impact of the latest buying restrictions. Will prices freefall? Is there any spillover effect on other cities? Zhong Shi joins me now in the studio with more details.

Q1. It's been two weeks since Shanghai and Shenzhen rolled out cooling measures to rein in the red-hot property market. How have prices been reacting?

I'll get to that in just a minute, but first, a revisit to the latest cooling measures. Let's begin with Shenzhen. The city raised its thresholds for non-residents to buy their first home. Previously they only needed to have paid social security for 1 year to be eligible.

Now, it's 3 years. Down payment for a second home was raised from 30 percent of the price to 40 percent. In Shanghai, down payment ratio for a second home was raised to 50 percent. Non-residents are now required to have paid taxes for at least 5 years in a row to become eligible home buyers, compared to 2 years previously.

The effects of the new tightening measures were almost immediate. Take a look at how the market in Shanghai has reacted. It is safe to say that the sentiment in both Shanghai and Shenzhen has changed. More people are now postponing their purchase plans to further gauge the market.

Q2. If we look at China's real estate market in general, it's such a divided picture. Markets in Shanghai and Shenzhen are so hot authorities had to put curbing measures in place. But those in China's much smaller 3rd and 4th-tier cities remain stagnant, leaving de-stocking a priority. What more can you tell us?

You're right. De-stocking is a buzz word and a key task facing the country this year. Unlike first-tier cities, small cities have had problems getting people to buy homes. Here’s what we’re dealing with. By the end of last year, a total of 718 million square meters worth of real estate property were in stock, a huge number by itself.

It has since risen to 739 million in February this year. And that doesn’t include property that’s under construction and those with building permission. Most of this floor space is in 3rd and 4th tier cities. Authorities have rolled out policies including lowering down payment requirements and taxes to measure the country’s economic planner says will work.

A report from the National Development and Reform Commission says downward pressure on home prices in third and fourth tier cities will remain in the short term, but the drop will narrow. Some of these small cities could even see a rise in prices this year.

Back to the situation in first-tier cities. Experts say prices are expected to fall due to the new tightening measures. But expect no price freefall or market crash because, unlike with smaller cities, supplies in mega cities are limited and the demand remains robust. Back to you.