The slowdown of the property market that was mainly seen in China's third- and fourth-tier cities last year has spread to more areas, and analysts warn of a tough 2014 for developers.
Figures released by the National Bureau of Statistics (NBS) last Friday showed that 178.25 million square meters of residential property were sold in the first quarter, down 5.7 percent year on year.
Wu Huimin, a board member of property service company DTZ, said although the first quarter is usually a slack season for the sector, the real reason behind the sliding transaction volume was because the market entered a period of adjustment after last year's robust sales and ever-rising prices.
According to the NBS, home prices in a pool of 70 major Chinese cities grew at a slower pace in March, with fewer cities reporting month-on-month price gains. Month on month, four cities saw new home prices decline.
Added to the property market woes is the credit crunch for both developers and buyers.
Stringent bank loans since the end of last year have dealt real estate firms, medium- and small-sized ones in particular, a blow in securing their fund chain, said Hu Baosen, board chairman of Central China Real Estate Ltd.
In the first quarter, paid-in investment to real estate enterprises was 2.87 trillion yuan (465 billion U.S. dollars), up 6.6 percent year on year, and the rate was 20.3 percentage points lower than the overall growth for 2013, according to the NBS.
Meanwhile, banks have not loosened their control over personal housing loans, making it more difficult to purchase property on mortgage.
Among the 35 major cities surveyed by Centaline Property Agency Ltd., 25 have seen their banks suspend housing loans.
"China's property market is adjusting after touching the ceiling, and the extent of adjustment will go beyond the anticipation," said Tian Ming, board chairman of Landsea Group.
"No property enterprises, big or small, are safe," Tian said.
In spite of the temporary hiccup, industry insiders however noted that the property market will embrace new opportunities thanks to China's urbanization and the government's loosening of controls.
Over the past decade, to curb high prices the government has controlled the real estate industry.
In this year's government work report, delivered at the annual parliamentary sessions, no new policies on property market control were mentioned, a sign that the government will give more say to the market, analysts said.