Apart from freebies, developers are also helping buyers secure financing. Pan Hong Property Group Ltd. provides bank guarantees for buyers and in some cases offers loans with interest rates similar to those offered at financial companies, according to Executive Chairman Wong Lam Ping.

China this year raised the minimum down payment for second- home purchases, and about 40 Chinese cities including Beijing and Shanghai started limiting the number of apartments to two for each family, and one for non-locals. The central bank increased interest rates five times since October.

In September, the government asked commercial banks to stop offering loans to third-home buyers and extended a 30 percent down-payment requirement for all first-home buyers.

Shui On Land Ltd., a Shanghai-based developer of luxury apartments near the city's Xintiandi bar and restaurant district, extended the deadline for down payments by an additional one to two months this year, Chief Executive Officer Freddy Lee said.

"Everybody uses marketing techniques," he said. "The market is just more competitive right now."

The developer, controlled by Hong Kong billionaire Vincent Lo, has no plans to cut prices because there's still "real demand" among buyers, Lee said.

Cash-Rich
Along the eastern coastal Zhejiang province, some homebuyers are purchasing properties through the companies they own, because the restrictions only apply to families, not businesses, according to Centaline Property Agency Ltd., China's biggest property brokerage with 38,000 employees.

"This group of buyers are cash-rich," said Liu Yuan, a Shanghai-based researcher at Centaline. "The only thing that they worry about is buying eligibility."

Property companies are still reporting gains in residential sales this year. Housing transactions from January to July climbed 25 percent to 2.4 trillion yuan from a year earlier.

"You need to understand that this is China," said Knight Frank's Hu. "Whenever the government has a policy, people will find a counter strategy."

Eoin Treacy's view China's monetary authorities will not be particularly happy to know that their efforts to cool the housing market are meeting with such resistance. This virtually ensures that they will continue to implement additional measures to tackle the high price of housing. These could include a property tax, higher transaction fees, the imposition of time limits on when a property can be sold to prevent flipping, higher deposit ratios, higher reserve requirements among banks as well as higher lending rates. Therefore it would be incorrect to assume additional tools to combat this problem do not exist.

The authorities are however treading a fine line between combating speculation in the housing market and tightening so much that it damages the wider economy. The Shanghai Property Index has been largely rangebound for more than a year and has exhibited a downward bias since April; A sustained move above 4000 would be required to confirm a return to medium-term demand dominance.