China will not slacken its efforts in regulating housing prices, since they are still far from falling back to a reasonable level, Premier Wen Jiabao said on Wednesday.

At a news conference after the conclusion of China's annual National People's Congress session, Wen called for long-term steady and sound development of the country's property market, saying gains will be lost and chaos will occur in the housing sector if the current regulations are loosened.

"If we develop the housing market blindly, a bubble will emerge in the housing sector. When the bubble bursts, it will not only adversely affect the housing market, but also weigh on the entire Chinese economy," he told reporters.

"The price should be considered according to people's incomes, and what I want to say is that the current price is far beyond that level."

The people's demand for housing is strong because China is a big country, with 1.3 billion people, at a stage of rapid industrialization and urbanization, according to Wen.

He said that, instead of each one having his own home, "We will continue to encourage people to rent houses."

While the fundamental role of the market in allocating resources should be fully exerted, the hand of government is indispensable as it can promote stability and social equality, he said.

Home prices in China fell for the sixth consecutive month in February, according to SouFun Holdings Ltd, the country's largest real estate website. Property prices nationwide fell 0.3 percent, the biggest drop since September 2011.

For Qin Xiaomei, chief researcher at Jones Lang LaSalle, the clear and determined message from the central government will definitely help to cool down property market sentiment.

"Local governments will continue to strictly implement current real estate policies. And property developers will be pushed to slash prices to stimulate sales," said Qin.

Christina Wang, a 26-year-old company executive, said she would delay her home purchase plan after seeing Wen's comments.

"Because I read in the newspaper that home sales across the country had seen a strong rebound recently, I had planned to buy a one-bedroom apartment this month. But now I would like to wait and see," Wang said.

According to an online survey by SouFun Holdings, around 50 percent of netizens said home prices would only be affordable after falling at least 30 percent.

"From the existing level, a 10 percent to 20 percent drop in home prices could be expected. And I believe the best buying opportunities will emerge from now to the end of this year," said Carlby Xie, head of research at real estate consultancy Colliers International (Beijing).

Though economists said the construction of government-subsidized housing will offset the decline in investment in the private housing market, Chinese shares tumbled after the central government reiterated its determination to rein in housing prices.

The benchmark Shanghai Composite Index plunged, after a small rebound the previous trading day.

The index fell 2.63 percent, or 64.57 points, to end at 2391.23, the lowest close in almost three weeks.

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