The growth in China's home prices decelerated across cities in January for the first time in 14 months, raising the likelihood of a correction in sales and construction activity going forward and sparking concerns of a "rocky quarter ahead."

New home prices rose 9.6 percent in January from the year ago period, compared with the 9.9 percent on-year increase in December, according to a Reuters calculation of official data released Monday, which showed prices rising in 69 of 70 Chinese cities on an annual basis.

Prices in Shanghai were up an annual 17.5 percent, compared with 18.2 percent in December, while Beijing prices climbed 14.7 percent in January from a year earlier, versus 16 percent in the month before.

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This is the first time the rate of price increases has slowed since November 2012. The pace of on-year price gains in December stayed stagnant versus November.

Analysts say the data signal that a string of tightening measures introduced by local governments in recent years, including raising minimum down payments for second homes and promising to supply more land for building residential properties, are working.

"While the new price data has surprised the market, a coming downturn was evident for the past 10 months," Brian Jackson, China economist at IHS Global Insight, said in a note titled House Prices in China Soften, Signaling Rocky Quarter Ahead.

"Following new national policies that launched in February 2013, month-on-month price growth decelerated through August. The second round of policies announced in August further ate away at price growth in major markets," Brian Jackson, China economist at IHS Global Insight, said in a note.

The Shanghai Composite fell on the news, down 2 percent early afternoon, with developers like Vanke leading the losses. Hong Kong's Hang Seng was down 1 percent.

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Also weighing on sentiment, were reports by the local media stating that some banks have started to tighten loans to sectors including property-related industries, although several banks were reported to have issued denials.

"Easing housing inflation serves as another sign that housing demand is cooling off, which argues against further strengthening of construction activity," Wei Yao of SG Global Economic, said in a note.

"On top of that, bank lending to the real estate sector seems to have started tightening up, as a number of commercial banks have reportedly suspended lending to developers. The development supports our view that the property market will contribute to investment growth deceleration in 2014," he added.