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Moody's: China property sales

Moody's: China property sales momentum to moderate; Policy fine-tuning to continue

Moody's Investors Service states that following a strong 22.5 % year-on-year rise in advancing nationwide contracted sales in China (Aa3 negative) for the 12 months to February 2016, development in nationwide home sales will likely narrow to 0 % -5 % for the rest of the year.

"We anticipate further policy tightening in cities with strong sales growth, which integrated with the formerly announced procedures will likely constrain the growth of contracted sales and property prices in the next 6-12 months," states Kaven Tsang, a Moody's Vice President and Senior Credit Officer.

Moody's conclusions were contained in its just recently released report "Developers Face Credit Negative Effects from Measures to Dampen Price Surge in Shanghai and Shenzhen". At the exact same time, Moody's has actually likewise released the current regular monthly edition of its "China Property Focus" newsletter.

Shenzhen and Shanghai have actually reported robust cost growth over the last couple of months, leading regulators to carry out procedures consisting of tighter home purchase restrictions, higher minimum down-payment requirement for second-home home loans, increased land supply for residential housing, and increased supervision over inappropriate financing plans for down-payments.

Moody's expects these procedures will lower property sales by reducing the number of qualified purchasers, and therefore moderate the contracted sales and property cost growth in targeted cities.

"At the same time, we expect policies will be unwinder in cities with high stock levels and weak property rates to help them decrease their stocks," adds Tsang.

Moody's regular monthly newsletter even more says the strong nationwide property sales in the first two months of 2016-- with cumulative contracted sales up 49.2 % year-on-year to RMB744 billion according to China's National Bureau of Statistics-- were the outcome of helpful monetary and regulatory policies implemented since 2H 2014.

The average asking price nationwide was also up 14.4 % year-on-year over the very same duration. And for the 7th consecutive month, all four first-tier cities posted double digit year-on-year cost development. Shenzhen signed up the highest cost development of around 57.8 % year-on-year in February 2016, followed by Shanghai at 25.1 %.

By contrast, bulk of lower tier cities tracked by National Bureau of Statistics of China continued to sign up negative year-on-year growth.

Advancing contracted sales for the 20-rated designers that Moody's track grew 57.2 % year-on-year in the very first two months of 2016 to around RMB213 billion. Moody's anticipate sales of Moody's-rated designers will remain to surpass the more comprehensive industry for the remainder of 2016.

Moody's took 11 unfavorable rating actions on property designers in between 27 January and 24 March 2016, mainly reflecting weakened financial metrics, weak liquidity profiles and/or the potentially damaged capability of their parents to supply support.

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