But mainland think-tank says overall investment to fall as banks tighten lending to curb price spiral China's property market is expected to remain overheated this year as the central government struggles with reforms to ensure a better distribution of resources and sustainable growth, a state-backed think-tank has predicted. The Chinese Academy of Social Sciences (CASS) expects investment in the real-estate sector to continue to account for at least 20 per cent of total fixed-asset investments this year, the same as last year, as there is a genuine demand for housing from the mass market. 'Real-estate investments [last year] accounted for about 20 per cent of the total and had put a strong demand on upstream products,' CASS researchers wrote in a report on the mainland's real-estate industry released yesterday. The price of upstream products such as steel and cement has surged to new highs since last year, forcing the government to bring in measures targeting these sectors. This year, CASS predicted real-estate investment in the backward western and central provinces would accelerate faster than in the prosperous eastern regions, where prices in some of the bigger cities such as Shanghai and Hangzhou have skyrocketed. Overall though, CASS said investment would fall as banks tightened mortgage lending to quell spiralling property prices that the ordinary citizen could no longer afford to pay. However, the downside of the credit tightening was that developers, particularly mid- and small-sized firms, were being squeezed so much that they could be put out of business. The bigger firms and survivors would look for alternative fund-raising methods such as initial public offerings as they reduced their reliance on bank loans, CASS said. Such shake-ups are expected to raise transparency in the industry, which has long been a hotbed for kickbacks for officials. Since the State Council's stern warning to local officials to stabilise property prices last week, city governments such as Shanghai and Shenzhen have imposed stricter controls on property sales, demanding better disclosures from developers of transactions. The central bank and local branches have also raised mortgage lending rates and down-payment ratios. CASS said it expected property prices to continue to rise but at a slower pace. The think-tank said the fundamental demand for housing was strong and the room for growth enormous. The focus this year will be on low- to mid-priced housing to help improve the lot of the majority of Chinese, who are still stuck in cramped living conditions. The Shanghai Real Estate and Land Resources Management Bureau has ordered flat owners to settle mortgage arrangements with banks before they sell off their properties to the next investor. The new rule is aimed at discouraging property speculation as banks tighten controls on mortgage lending.