Dealers said the official comments led share prices in Shanghai to close 1.62 percent lower, with a knock-on effect on Tokyo and Sydney's markets, which also closed lower.

Authorities in China have issued a slew of measures in recent months aimed at preventing the property market from overheating and causing a bubble that could derail the world's third-largest economy.

The Ministry of Housing and Urban-Rural Development has urged local governments to strictly comply with lending policies designed to curb speculative investment in property, according to a statement dated late Monday.

The ministry said "positive changes had emerged in the property market" as a result of the measures and repeated it would increase the supply of affordable homes.

Chinese property prices in June fell 0.1 percent from the previous month, their first monthly fall since the first quarter of 2009, according to official data.

The China Banking Regulatory Commission said in a separate statement that there had been no policy changes or revisions to mortgage requirements for second and subsequent home purchases.

"Commercial banks must strictly implement these rules unwaveringly," it said.

The remarks came after media reports said banks in first-tier cities including Beijing, Shanghai and the booming southern town of Shenzhen had resumed lending to buyers of third homes.

The reports pushed Chinese markets up 0.80 percent on Monday.

The State Council in April said the down-payment for purchases of second homes must be at least 50 percent and mortgage rates must be at least 1.1 times the benchmark rates.

The down-payment requirement and mortgage rates for purchases of third or subsequent homes must be "raised significantly" in line with banks' risk management policies, the cabinet said at the time.

Experts were mixed on how well the measures were working so far.

Zhang Gang, an analyst at Central China Securities, told Dow Jones Newswires: "It's too early to expect property tightening measures to turn around as the property prices didn't significantly decline."

But Alastair Chan, an economist for Moody's Analytics, said there were signs that government policies were having an effect.

"China's residential property market is showing further evidence that the government's tightening measures are working, and the extent of the slowdown is likely to prompt a policy reversal in coming months," he wrote in a note.

Tokyo and Sydney's stock markets were both down on Tuesday partly on the decline in Shanghai, traders said, reflecting increasing linkages between the countries' economies.

In Chinese markets, property developers were hit Tuesday, shedding some of the gains from the previous session.

China Vanke, the nation's largest property developer by market share, fell 2.4 percent to 7.46 yuan, after having risen 5.5 percent in the previous session.

Poly Real Estate was down 4.3 percent to 11.33 yuan after gaining 3.7 percent the day before.

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