China's property market is beginning a collapse that will hit the banking system, Harvard University economics Kenneth Rogoff told Bloomberg Television.

Property transactions have dropped and prices are stagnating in the wake of steps in recent months by the central government to cool the market.

Xu Shaoshi, minister of land and resources, said at the weekend that he expected prices to start falling within a few months.

You're starting to see that collapse in property and it's going to hit the banking system, Rogoff, a former chief economist at the International Monetary Fund, told the agency.

Not everyone agrees. Because home owners must make a downpayment of at least 20 percent and many pay entirely in cash, there is relatively little leverage in the Chinese property market.

Despite the importance of the property sector in the economy, we believe that the deflating of this bubble should have only a limited impact on the real economy and the banking system, Nomura's chief China economist, Sun Mingchun, said in a report.

The Chinese-language 21st Century Business Herald newspaper on Tuesday quoted a real estate association official as saying government tightening measures were yielding initial results.

But prices in Tier-1 cities such as Beijing and Shanghai had not yet declined, he said, so officials needed to step up implementation of the measures, which include higher down payments, the end of mortgage rate discounts, curbs on purchases of multiple homes and restrictions on lending to developers.

(Reporting by Alan Wheatley and Langi Chiang; Editing by Jacqueline Wong)