In Beijing, Shanghai and Shenzhen, average housing prices exceeded 30,000 yuan per sq m, while in third-tier cities, the average was a much lower 7,330 yuan per sq m.

Zhang Zhiwei, an economist at Nomura Securities Co Ltd in Hong Kong, said the property markets in the country's third- and fourth-tier cities face severe risks, and will pose the greatest challenge to the Chinese economy over the next two years.

"From a macro perspective, first- and second-tier cities are much less important than the other cities," said Zhang.

Property price surge 'could soon be over'

As residential home market cools, investment keeps on growing

The four top cities accounted for only 5 percent of housing under construction and sales (in terms of square meters) and 8 percent of housing investment in 2013, according to Nomura's calculations.

The 24 second-tier cities accounted for 28 percent of housing under construction, 27 percent of housing sales and 35 percent of housing investment. The remainder, in third- and fourth-tier cities, comprised 67 percent of housing under construction, 69 percent of sales and 57 percent of housing investment, Nomura's data showed.

"In China, the true risks of a sharp correction in the property market are not in Beijing or Shanghai but in third- and fourth-tier cities, which are not on investors' radar screens," said Zhang.

Looking forward, a number of analysts are expecting some policy easing, considering the property sector's influence on the overall economy.

Zhu Haibin, chief economist in China at JPMorgan Chase & Co, said that in some cities where the housing market is nearing a slump, there may be selective easing in policies regarding purchasing restrictions or mortgage terms.

The possibility of selective easing, Zhu said, stems from the weaker economic data in the first quarter.

China's GDP growth in the first quarter stood at 7.4 percent, which was lower than the government's 7.5 percent target for 2014. And slowing real estate activity is believed to be an important factor pulling back fixed-asset investment growth and dragging down the overall economy.

"With this macro backdrop, and considering the significant regional differences in housing market developments, we may see some degree of selective easing in property-tightening measures," Zhu said. "But we don't expect a major shift in the national property policy in the near term."