The Chinese government's efforts to cool the property sector may finally pay off in 2018, with UBS forecasting zero growth in real estate transactions for the entire year.
Real estate purchases slowed in the second half of last year after authorities intensified crackdowns on speculative buying. Soaring demand for properties and a rapid build-up in debt had stoked fears of potential fallout in the world's second-largest economy, which would have had global consequences.
"I think in terms of the physical market, we think sales volume will moderate but not necessarily collapse. So, we've got national sales volume slowing to around zero percent," Kim Wright, UBS global head of real estate equities research, told CNBC on Monday from the UBS Greater China Conference in Shanghai.
Chinese authorities have rolled out a flurry of measures since 2016 to tame the overheated property market, including restrictions on home purchases and higher mortgage down payments.
But the clampdown seemed to have benefited the large real estate companies such as Country Garden and China Vanke, which have gained market share as smaller players exit the increasingly tough sector. Just a week into the new year, shares of both companies have climbed close to 20 percent for 2018.
Their prospects in the coming months will depend on how they hold up against a slowing property sector, Wright said.
"The performance of the companies will depend a little bit on how well they can continue to gain market share," she added.