Chinese property stocks rallied on Monday on speculation the government may loosen the policy curbs on the country's overheated real estate sector after gains in housing prices in major cities slowed.

China Vanke Co, the country's largest property developer by market value, gained 5.52 percent to close at 7.64 yuan ($1.13), while Poly Real Estate Group Co, the second-largest developer, rose 3.68 percent to 11.84 yuan.

Four developers including Beijing North Star Co Ltd jumped by the daily limit of 10 percent on media reports of loosening restrictions on third-home loans, as the government's efforts to cool the property market started to take effect.

The latest official data also pointed toward a turnaround in the country's overall property price trend. Housing prices in 70 major cities fell 0.1 percent from May, the first month-on-month decline since March last year, according to the National Bureau of Statistics.

On a year-on-year basis, property prices in major cities rose at a slower pace of 11.4 percent in June, down from May's 12.4 percent rise, according to the bureau. It was the second consecutive month that China's property prices grew at a slower pace.

Home purchases were also reported to have slowed in May and June as homebuyers adopted a wait-and-see attitude in the face of the government's property tightening measures.

Monday's rally of developers' shares was mainly boosted by investors' expectation that Beijing would refrain from introducing more tightening measures in the second half of year, although the market has not performed in the way the government was expecting to see, market watchers said on Monday.

Some analysts said they think that the policymakers in Beijing are unlikely to loosen the curbs on the property market before they see a substantial fall in house prices.

"Property sales have declined but prices seem to remain stagnant. If the government loosens the curbs, it could lead to a retaliatory rise in property prices," said Yu Jinhua, an analyst at Huatai United Securities.

Yu said Monday's property stock rally is unlikely to turn into a sustained rebound because a substantial fall in property prices is unlikely to happen soon, therefore the government's tightening measures will remain intact before the desired results are achieved.

"Therefore, property stocks will continue to move range-bound in the third quarter," he added.

Industry analysts estimate that growth in property investment in the country will see an all-round decline by the end of the third quarter and signs of a potential fall in property prices are expected to emerge in the fourth quarter.