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I think it affects developers most, because currently sales volume has slowed down. A lot of them are facing cash flow problems. For banks, I think the impact is a bit less because they're not likely to see big problems or big defaults from home purchases although they might see some problems from developers'loans."
Standard & Poor's ratings agency recently lowered the outlook of China's hot real estate property market to negative from stable on Wednesday.
"We're likely to see more negative rating actions among Chinese developers in the next six to 12 months because of tightened onshore credit conditions and increasingly restrictive government policies that deepened the market downturn," said Standard & Poor's credit analyst Bei Fu.
The analyst added, "Any meaningful slip in sales will significantly weaken the developers' cash flow protection measures amid higher leverage and stiff competition."
Meanwhile, Bei Fu said in a report that property prices are estimated to fall 10 percent in the next year.
Gu Wei, Reuters Breakingviews columnist, agreed with the prediction, adding that it is due to the harsh policies on home purchases.
"Current policies are harsh, and the mortgage percentages are tough measures. We see people holding out and property developers are holding out as well. But volumes are thin so I suppose developers may slash prices to get people buying," said the columnist.
China has launched a series of tightening measures since last year, including halting regulatory approvals on developers' fund-raising plans and limiting home purchases via bans on third and subsequent homes in some cities.
If housing prices fall sufficiently to ease social concerns over affordability levels, developers would suffer worse than banks which might face limited impact, said Gu Wei.
"I think it affects developers most, because currently sales volumes have slowed down. A lot of them are facing cash flow problems. For banks, I think the impact is a bit less because they're not likely to see big problems or big defaults from home purchases although they might see some problems from developers' loans."
A Reuters report on Wednesday says China Vanke, the country's largest property developer, fell 0.86 percent in terms of sales.
Except for real estate developers, the columnist thinks some local governments are unwilling to see weak property sales.
"It could have a big impact on local government revenue because housing and land revenues are the biggest revenue source for local governments."
However, for those who worry about their inability to buy a home without earning enough money, it's really good news.