Home prices in China are expected to decline by as much as 30 percent in 2012, primarily attributed to government measures, according to Barclays Capital Research.
The Barclay's report noted that the correction in the property market will affect the country's economic growth but will not lead to a financial meltdown, citing the low leverage ratio of Chinese households.
"Prices are likely to correct more in large cities," the group said. "But it is also important to remember that the government's purpose is not to crash the housing market, since that would cause devastating consequences for the economy."
Barclay's economist Huang Yiping added that the government will likely ease policy restrictions if home prices fall by 20 percent.