The mainland property market will continue to grow, but at a slower pace, while developers which focus on the mass market will experience strongest growth, Moody's Investors Service said.
Its view, in a report released yesterday, echoed predictions by analysts that property prices will rise 5 to 10 per cent this year.
Moody's said the outlook for the property market remained stable, which reflected its expectation of 10 per cent year-on-year growth in the value of residential property sales over the next 12 months, in line with last year.
Sales have fallen from the high levels in this year's first quarter, after the central government issued guidelines in February to regulate the market, said Kaven Tsang, a Moody's vice-president.
The clampdown on investment demand would slow price increases, Tsang said.
"Urbanisation and favourable mortgage financing for first-time homebuyers will continue to support demand and sales volume," he said.
Moody's said the February guidelines would not dampen overall sales volumes because many developers had shifted their focus to mass-market housing, which is not the target of the government's policies.
Meanwhile, liquidity remains adequate for most of the 40 developers rated by Moody's, partly thanks to continued access to offshore bond markets and stable property sales growth.
Peter Choy, a senior vice-president of Moody's corporate finance group, said there was less risk of further government intervention because of signs of weakness in economic growth.
"The probability of tougher measures is low," Choy said.
Meanwhile, a report from the investment bank Jefferies yesterday said estimated pre-sales by major developers last month fell 17 per cent month on month, although they grew 24 per cent year on year on average. Despite the drop from March, stronger developers were on track to reach full-year targets, it said.
Daiwa Capital Markets said in a report last week the average property price on the mainland would continue rising, at least over the next two to three years.
However, property prices in different cities should diverge because of differences in land supply, economic development and income growth, it said.