Moody’s sees stable property market, but challenges ahead

[email protected] China Post

A stable outlook is expected in the Chinese mainland property market in the coming 6 to 12 months but going forward developers face a challenging operating environment, Moody’s Investors Service said in a report.

Moody’s said the challenging operating environment is manifesting itself nationally in a slight drop in home sales values, tighter regulatory measures, rising home inventory levels and a gradual tightening of market liquidity.

“The stable outlook reflects our expectation that national residential property sales will slow but will remain within our parameters,” said Franco Leung Chun-bong, vice-president and senior credit officer at Moody’s.

The US credit rating agency expected nationwide that contracted sales value growth would be slightly negative through May this year against the soaring 36 percent year-on-year growth registered for the same month in 2016.

Residential property sales volumes will contract and home prices will slow, as the Chinese government continued its tightening regulatory measures in major Chinese cities, Moody’s added.

“We also expect the Chinese government to keep in place the tight regulatory measures designed to cool prices in higher-tier cities,” Leung added.

As of April 21, 45 Chinese mainland cities had home-purchase restrictions in place to curb speculative investment demand and these locations accounted for around 50 percent of the country’s contracted home sales in 2016, the credit rating agency noted.

The third factor to gauge is the home inventory level, Moody’s said.

The Moody’s survey found that the current inventory levels of primary residential properties were below the peak levels in early 2015.