By V. Phani Kumar

Analysts say China's rising property prices will soon begin easing, not just because of a much-discussed slowdown in bank lending, but because of a rush of new supply from government land auctions.

"Compared to the 2006, 2007 and 2008 levels, the amount of land in the market in 2009 looks significant -- a supply avalanche indeed," Nomura International analyst Wee Liat Lee and Alan Jin wrote in a report released Friday.

"Historically, when land purchase grows in the high double-digit rates, growth in property prices also moderate into the single-digit levels. We expect this to happen into 2010," they said.

Property prices in several Chinese cities have risen quite sharply this year because of lower interest rates and a boom in bank lending, which in turn led to a sharp rally in shares of mainland Chinese property companies traded in Hong Kong, Shanghai and Shenzhen.

Many of them -- including China Overseas Land & Investment , Country Garden Holdings Co. , Guangzhou R&F Properties , Beijing North Star , Poly Real Estate Group and China Vanke (CVKEY) -- have at least doubled from their 52-week lows. But more recently, these stocks have come under pressure amid fears that banks were controlling the flow of credit toward the property sector.

In Friday's trading, shares of China Overseas Land fell 1.1%, Country Garden lost 1.8%, Guangzhou lost 2.3% and Beijing North Star gave up 2.6% in Hong Kong. Among shares traded on mainland bourses, China Vanke slipped 0.4% in Shenzhen, while Poly Real Estate dropped 2.2% in Shanghai.

Nomura analysts said that increases in supply of land through government auctions will be "more effective in moderating property price growth" in coming months.

"As such, we think the government wouldn't want to run the risk of over-tightening, which could derail the economic growth momentum," Nomura said.

It added that in addition to ensuring a greater supply, the government was "stepping up efforts to monitor development progress. Any intentional hoarding behavior will be punished by the local governments."

In wider market action Friday, China's Shanghai Composite fell 2.4% to 3,066.09, Hong Kong's Hang Seng Index dropped 0.7% to 20,724.05, Japan's Nikkei 225 Average rose 0.5%, South Kora's Kospi advanced 1.1% and Australia's S&P/ASX 200 climbed 0.6%.