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Moody鈥檚: China鈥檚 residential property market will be stable next year
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OUTLOOK for China's residential property market is stable next year though regulatory risk remains high in light of the rapid growth in home and land prices, according to a latest forecast by international ratings firm Moody's.
"We expect the growth in nationwide contracted sales by value to be flat or slightly negative in 2017, against a high base of contracted sales for 2016," said Kaven Tsang, vice president and senior credit officer at Moody's. "We estimate sales growth of around 25 percent year-on-year for the full year of 2016."
Sales volumes will decline by around 5 to 10 percent next year thanks to the tightening measures implemented in major cities in September and October, but the decline will be partly offset by a modest increase in prices, Tsang predicted.
In terms of price, a sharp decline seems unlikely in the next six to 12 months, given the relatively low inventory levels in high tier cities, Moody's said.
On developers' side, their gross margin will stabilize next year mainly due to reduced destocking pressures and improved selling prices, amidst the strong contracted sales registered during the past 12 to 18 months, according to Moody's, which rates 50 developers in China.
A further dramatic tightening of regulatory measures to curb persistently high property prices, which will possibly trigger a fall of more than 5 to 10 percent in national contracted sales over the next six to 12 months, may change the sector outlook to negative. On the other hand, if national contracted sales rise by more than 10 percent annually on a sustained basis and in a low regulatory risk environment, the outlook could shift to positive, Moody's said.
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