Property developer Zhang Xin made a fortune over the past decade on the back of a building boom fuelled by China's blistering economic growth and the privatisation of its housing market.

Now the co-founder of SOHO China, one of the nation's leading developers, is worried Beijing's efforts to cool the sector are hurting sales and threatening to send some debt-laden property developers to the wall.

"In my sixteen years as a developer this is by far the most challenging year I've ever had, in terms of what we could sell," Zhang, chief executive of Beijing-based SOHO, recently told reporters.

China has invested heavily in property -- about $750 billion in 2010 alone -- since it privatised the market in the late 1990s, ending decades of state allocated housing and enabling a growing middle class to own their own homes.

But with real estate investment now a key driver of the economy, there are fears a collapse in the market could trigger social unrest fuelled by millions of home-owners seeing the value of their properties plummet.

A massive stimulus package unveiled in late 2008 to combat the global financial crisis triggered a flood of credit into the world's second-largest economy, with a large portion funnelled into construction.

Since the beginning of this year Beijing, fearing a bubble, has been trying to bring down dizzying prices by hiking interest rates and restricting lending to developers, making it nearly impossible for many to get financing, Zhang said.

"We're now facing a very uncertain time," he said.

Authorities have also banned the purchase of second homes in some cities, increased minimum downpayments and introduced property taxes in Shanghai and Chongqing.

"That really has killed the market," Zhang added.

Industry officials and analysts are worried that the measures are now squeezing sales so much that property developers who have borrowed heavily to fund new projects could be tipped into bankruptcy.

"Near-term prospects for real estate developers are increasingly gloomy," said London-based research house Capital Economics, noting third-quarter sales fell 15 percent from a year ago.

"A wave of newly completed property is about to hit the market. Developers are likely to find themselves holding large volumes of unsold property."

In August, 46 out of China's 70 major cities reported residential housing prices fell or stayed the same compared with July, official figures showed.

In once-booming Shanghai, the volume of new home sales fell over 50 percent year-on-year in September, according to information provider SouFun. In the capital Beijing, home sales in the secondary market are at a three-year low.

"The hard times aren't over yet. Industry consolidation is likely to accelerate, weeding out weaker players," ratings agency Standard & Poor's said in a recent report.

Some developers struggling to get financing from banks are turning to trust companies -- firms set up by local governments to fund pet projects -- and other informal lenders which charge much higher interest rates than banks.

Standard & Poor's estimates some weaker developers have repayments due that exceed their expected sales next year, while Capital Economics forecast "many developers are likely to fail".

While Beijing has pledged to maintain tight credit controls for now, it may reconsider its position if property firms start to default or go bankrupt -- or if the global economic downturn severely impacts the country, analysts said.

The risk of popular anger was shown earlier this month when scores of home buyers protested to a Shanghai property developer after it slashed prices for an unfinished project in nearby Jiangsu province, which they had bought at higher cost.

But for the next six to 12 months restrictions on credit and weak property sales are likely to persist, according to Standard & Poor's.

"So far, the objectives of the government towards the sector are still not being met. It's still going to be on the tightening end," said Christopher Lee, director of S&P corporate ratings for the Asia-Pacific.

But in Shanghai -- where the average cost for one square metre of downtown housing was 48,000 yuan (about $7,500) last year, about 12 times the average monthly salary -- home buyers have little sympathy for cash-strapped developers.

"Considering the high housing prices in Shanghai, a new flat is just a dream," said Qian Xueqi, a manager at an international hotel.