Even if banks do begin cutting off loans to property-related players, that doesn't necessarily mean funding entirely dries up.
The larger overseas listed developers have access to offshore capital, while smaller ones can sell some of their projects or use alternate financing, such as private wealth-management and trust products, said Du Jinsong, head of Asia property research at Credit Suisse. To be sure, the government has moved to slow the growth of these "shadow banking" funding channels.
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But he added, "the whole sector plunged today not because of the tightening to the developers per se, but to the news that many of the banks have delayed or temporarily stopped giving out mortgage loans," he said. "To me that is not new news, but it has been reported very widely over the weekend."
So far, he doesn't believe these steps have been dictated by the government, which has been trying to slow credit growth to overheated sectors including property.
"I think it's a market-oriented action by the banks themselves because they want to protect their margins and also fix the problem of duration mismatch. I do think that this is basically the individual banks' initiatives," Du added.
Others aren't sure whether the reported Industrial Bank move indicates any sort of trend.
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"The Industrial Bank's decision may suggest some changes in its perception on the property sector, but we note that the Industrial Bank is known for its aggressive stance in innovative financing," Bank of America Merrill Lynch said in a note. "It might be time for the bank to be a bit more conservative."
The bank believes mezzanine financing for developers and funding for upstream suppliers, such as cement and steel producers, likely account for only a small part of banks' exposure to the property sector, with the majority usually from mortgage financing.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1