The mainland's mortgage lending market will continue to shrink, as the property market is unlikely to recover from the effects of government-imposed austerity measures next year, according to analysts. However, the sector still has the best potential for growth in the consumer banking market. HSBC economist Qu Hongbin said the property market would continue to lose steam as the economy softened next year because of the macroeconomic controls introduced last year. With property transactions falling, it was logical that mortgage growth would slow, Mr Qu said. The slowdown in lending for property development, as well as for individual mortgages, showed up in the central bank's first quarterly report for the year. The People's Bank of China said property lending grew 25.1 per cent to 2.5 trillion yuan in the first quarter, 17.1 percentage points lower than the same period last year. The government's austerity measures have successfully halted soaring house prices. According to the Price Monitoring Centre of the State Development and Reform Commission, prices in key cities rose 0.5 per cent month on month in May. ABN Amro warned that Beijing's measures to cool the overheated property market would put upward pressure on non-performing loans, and that a deterioration in banks' asset quality was inevitable this year in the face of a further decline in property prices. In the long run, ABN Amro said mortgage lending would be one of the highest potential growth sectors in the consumer banking market. Mortgage lending on the mainland accounts for only 9 per cent of total loans, compared with about 40 per cent in markets such as Hong Kong, Singapore, Taiwan and Malaysia.