Share prices of property developers plunged on Monday following signs of regional cooling in home prices and the market's response to the bearish outlook of the sector.

The overall property sector on China's A-share market fell more than 5.26 percent on Monday, the same day when official data on the property market was released.

Large property developers, including China Vanke, Poly Real Estate Group, and China Merchants Property Development, saw their shares collapse between 6.56 to 8.51 percent at market close Monday, dragging down the benchmark Shanghai Composite Index, which ended 1.75 percent down from the previous trading day.

Home prices dropped month-on-month in six of 70 cities tracked in January, compared with two in December, indicating a gradually cooling property sector, data from the National Bureau of Statistics (NBS) showed on Monday.

In year-on-year terms, average home prices in the 70 cities grew by 9.5 percent in January, down 0.2 percentage points from December, according to official data.

A private survey of 100 cities by Soufun, China's largest online property consulting company, indicates five more cities witnessed falling prices compared with December.

The sliding share performance was also in response to recent reports of falling prices in the southern Chinese cities of Hangzhou and Changzhou, signaling a downturn in the property market.

"Minimum price of apartments for sale is now 11,800 yuan ($1,935) per square meter, down 6,000 yuan from before," Zhang Yu, a saleswoman at a newly built residential community named Champs Elysee located in north Hangzhou, Zhejiang Province, told the Global Times.

"Our rivals have also cut their prices," Zhang said.

StarRiver, a high-end property in Changzhou, East China's Jiangsu Province, went further by offering almost a 60 percent discount to as low as 5,380 yuan per square meter during the past three days, said a saleswoman who declined to be named.

The first quarter is normally the off-season for the real estate sector, and the property market grew too much in the last year, which may have led to the cooling in January, said Zhu Zhongyi, vice president of China Real Estate Association.

A single month's data does not tell the big picture and more attention should be paid to the industry policy expected to be brought up at China's upcoming parliamentary meetings, or two sessions, in March, said Zhu.

"It is beginning to cool down but is not yet the tipping point for a collapse of the property sector," said Yang Hongxu, vice president of Shanghai E-house Real-Estate Research Institute.

"In 2013, China had a 10 percent increase in new home prices and 20 percent growth [floor space] in new home sales. We don't expect that trend to be sustained," Lu Ting, chief China economist at Bank of America Merrill Lynch, told the Global Times.

Lu expects average year-on-year home price growth to slow to a low single digit on tapering pent-up demand and higher housing supply.