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Building homes may slow even more
By Cao Qian |
December 14, 2011, Wednesday
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Print Edition
Print Edition
GROWTH in China's homebuilding sector may slow even more next year as overall bank lending to real estate developers will remain tightly controlled and rules to curb home purchases are unlikely to be reversed, Fitch Ratings said in a latest report.
A slowdown in contracted sales and homebuilders easing back on construction schedules will lead to an overall slower pace of growth in 2012, although the sector's long-term prospects will continue to be positive due to urbanization and rising household income, according to the report.
Fitch also said that developers' profit margins and cash flow generation will be affected in the near term by lower property prices due to weaker demand from homebuyers. The report said that while large developers may benefit from their strong financial position and substantial scale, smaller players continue to be challenged by limited financial and operational flexibility.
The central government's strong commitment to containing and stabilizing property prices through its series of austerity measures since late January has affected housing sales.
In the first 11 months of this year, new home sales, excluding government-funded affordable housing, rose 7.5 percent from a year ago to 800 million square meters across the country, a drop from an annual growth of 9 percent recorded between January and October, according to latest research released by the China Index Academy.
Meanwhile, developers reported weakening sales amid a wider "wait-and-see" sentiment among homebuyers. Fourteen of the 15 real estate developers which have already released their November sales data suffered notable monthly fall in transaction volume.
A slowdown in contracted sales and homebuilders easing back on construction schedules will lead to an overall slower pace of growth in 2012, although the sector's long-term prospects will continue to be positive due to urbanization and rising household income, according to the report.
Fitch also said that developers' profit margins and cash flow generation will be affected in the near term by lower property prices due to weaker demand from homebuyers. The report said that while large developers may benefit from their strong financial position and substantial scale, smaller players continue to be challenged by limited financial and operational flexibility.
The central government's strong commitment to containing and stabilizing property prices through its series of austerity measures since late January has affected housing sales.
In the first 11 months of this year, new home sales, excluding government-funded affordable housing, rose 7.5 percent from a year ago to 800 million square meters across the country, a drop from an annual growth of 9 percent recorded between January and October, according to latest research released by the China Index Academy.
Meanwhile, developers reported weakening sales amid a wider "wait-and-see" sentiment among homebuyers. Fourteen of the 15 real estate developers which have already released their November sales data suffered notable monthly fall in transaction volume.
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