Mainland shares of property developers closed sharply higher on Monday despite the announcement over the weekend that Beijing and Shanghai will enforce the property curbs announced in early March.
The Chinese government has been trying to cool its red-hot property market and has called for stricter enforcement of a 20 percent capital gains tax on home sale profits and asked cities with fast property price increases to raise the down payment requirement and mortgage rates on second homes.
Michael Klibaner, head of research Greater China at Jones Lang LaSalle said property stocks are staging a relief rally, because the measures were not surprising.
On Monday, Shanghai-listed shares of major real estate counters were up over 2 percent with China Merchants Property Development gaining almost 5 percent, outperforming the benchmark that closed down 0.1 percent. Hong Kong markets were shut for a holiday.
"I guess the market may have been prepared for something worse, so maybe it's a relief rally," Klibaner told CNBC. "My interpretation is that people were prepared for worse."
The fact that only three cities, including Guandong, have so far announced the implementation of these curbs and the dilution of some of these measures - like Beijing saying the capital gains tax could be waived under certain conditions - eased some investor fears.
Xianfang Ren, senior economist at IHS said nothing in the measures announced on Saturday by the three cities had exceeded the broad guidelines the central government had set on March 1 and it won't add additional pressure on the housing market.
Plus, a private survey on Monday showed that average home prices in China's 100 biggest cities rose for the 10th straight month in March, providing further momentum to stocks.