The growth of real estate investment in China is likely to decelerate in coming quarters, despite robust growth in the first quarter, as policy tightening may eventually weigh on property sales and investment activities, analysts said on April 17.

Property investment rose by 9.1 percent year-on-year in the first quarter of the year, the fastest growth rate since March 2015, data from the National Bureau of Statistics showed.

The robust growth showed that the property sector remains a crucial driver of the Chinese economy.

But officials and analysts says strength in the property sector may moderate in the coming months, as rounds of stringent cooling measures by the government to rein in surging housing prices will gradually take effect.

NBS spokesman Mao Shengyong says the effect of the policy tightening on the property market and the overall economy will emerge in April and later, since the latest cooling measures were issued after March 17.

"It is very likely that transaction volumes by floor space and the growth rate will decelerate in the coming months, which will affect the investment enthusiasm of property developers," Mao said at a news conference.

Growth of property sales measured by floor space rose by 19.5 percent year-on-year in the first quarter, down from 25.1 percent in the first two months of the year.

Zhao Yang, chief China economist at Nomura Securities Co, says the strength in property investment is not likely to be sustainable and the sector is expected to cool in coming quarters, given rounds of policy tightening in the property sector.

The price surge has prompted at least 50 cities to adopt stricter measures since mid-March to cool the property market and to curb speculation. The Beijing municipal government has raised the down payment for second homes with space exceeding 140 square meters to as much as 80 percent.

Zhu Haibin, chief China economist at JPMorgan Chase & Co, says the outlook for the housing market is a major uncertainty for the Chinese economy this year, although extreme fluctuations in the sector are unlikely.

"We do not expect extreme movements (either a boom or a bust scenario is very unlikely this year), given the current demand-supply conditions in the housing market and the policy incentive to stabilize rather than crack down on the housing market," Zhu says in a research note.

But given the importance of the housing market, even modest upside or downside risks to the housing market could affect the trajectory of growth forecasts, he adds.

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