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BEIJING (Reuters) - China's house price growth will slow significantly on continuing government curbs and tighter credit conditions this year, dampening land sales that hit record highs in 2016, but views diverge on whether prices will correct sharply, a Reuters poll showed.
Home prices across the nation are expected to rise a median 5 percent in the first half of the year and 2 percent for the full year, the poll estimated. Analysts expect a lag between official tightening steps and the deceleration in price growth.
Prices of new homes in China surged 12.4 percent last year, the fastest rate since 2011, prompting more than 20 cities to introduce property curbs to cool the market since October.
The red-hot land market, widely regarded as one of the main reasons for a sharp rise in house prices last year, is also seen coming off the boil this year as developers' financing channels, such as property bond issuance, have also been tightened.
Most analysts expect Beijing's cautious policy tone and tighter credit conditions to continue to weigh on the property market this year, as Chinese leaders have pledged to stem the growth of asset bubbles and prevent financial risks in 2017.
"From our sales figure in January and February, the upward momentum in the market is not contained yet. If it persists, the government will be pressured to tighten credit," said property consultancy Centaline's research arm.
The central bank has raised interbank lending rates in recent weeks, as part of efforts to implement a "neutral and stable" monetary policy to control the amount of money in the market.
Despite a more bearish view of the property market, only three of 11 analysts polled predicted that prices would fall this year. Inventories remain low in the biggest cities and cash-rich developers who made lucrative profits last year have little incentive to lower prices on new units, analysts said.
But half of those polled said some second-tier cities could be at risk of a sharp price correction.
These cities include Zhengzhou, Wuxi, Hefei, Suzhou and Hangzhou, which posted double-digit price growth in 2016 except for Wuxi, which is not included in the 70 cities monitored by the National Bureau of Statistics.
China's housing market has become increasingly polarised, with prices skyrocketing in the biggest cities - Beijing, Shanghai and Shenzhen - while smaller cities are grappling with large housing gluts. The central government has had to rely more on local governments to implement city-based housing policies to address the imbalances.
Data from the Housing Ministry shows residential property inventory dropped 11 percent in 2016, but still totaled 403 million square meters by year-end.
A cooling property market would also drag property investment growth to a median 3 percent in 2017, according to the poll.
China depended heavily on the property market and record government lending to drive growth last year, as real estate investment rose 6.9 percent in 2016, official data showed.
Chinese banks extended a record 12.65 trillion yuan ($1.84 trillion) of loans in 2016, half of which were mortgage loans.
Poll respondents still see Chinese home prices as expensive. On a scale of 1 to 10, where 1 is extremely cheap and 10 is extremely over-valued, the median reply was 7, lower than the 8 in the last poll, though some analysts have pointed out smaller cities are much more affordable than the biggest cities.
Additional Reporting by Jenny Su; Editing by Jacqueline Wong