The cash crunch in the mainland's banking system could add to the pressure on developers, particularly the highly leveraged small players, analysts say.
The overnight Shanghai interbank offered rates hit a record high of 13.44 per cent on June 20 after the central bank initially refrained from intervening to ease the interbank liquidity squeeze.
"This implies that property-related loans, such as development loans and mortgage loans, will become more expensive in the second half of this year, which may lead to further credit tightening, as we expected," CCB International Securities said.
The People's Bank of China's tough stance demonstrated the government was prepared to tackle the property market with the same determination, especially in key cities experiencing rises in housing prices in recent months, the firm said in a report.
Alan Jin, an analyst at Mizuho Securities, said small property players, especially the highly geared ones, would face more difficulty if there was a credit crunch. "It's always the case that small players are more vulnerable in the face of credit tightening," he said.
He said tight liquidity, if it persisted, would reduce the growth momentum in housing prices, and only after that would there be a price correction.
"If [mainland developers] feel really tight, they will cut prices and sell stakes, partial or whole, [in projects] to stronger players. But we need to wait for a few more quarters to see whether a credit crunch will come," Jin said.
Albert Lau, a managing director of Savills China, said he heard the mainland intended to tighten credit as more sites in key cities would be sold at record prices.
"Higher borrowing costs could hurt market sentiment in the second half of the year. But there's no panic selling at the moment," Lau said.
He expects foreign funds to take advantage of property developers caught by the tightening in credit by acquiring their assets at lower prices.
Shui On Land's Foshan deputy project director Dixon Man said the recent volatility in the financial market had had little impact on the developer.
"Each of our projects has a development scale of more than 1.5 million square metres and will take us 10 years to complete. So we will factor in short-term market volatility when we map out our long-term investment plan," Man said.
The company hoped to reap 500 million yuan (HK$627 million) from the sale of 104 units in four of its mainland developments to be released in Hong Kong this weekend, he said.
Jessica Wang, project director at Shui On's Rui Hong Xin Cheng in Shanghai, said most first-time mainland homebuyers still enjoyed a 15 per cent discount from the benchmark rate when they applied for mortgage loans from banks.