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Moody’s shifts view on China’s real estate
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MOODY’S Investors Service is changing its outlook on China’s real estate sector to stable from negative amid an anticipated modest growth in property sales.
The change in its outlook reflected the rating agency’s improved expectations for the real estate industry’s business conditions over the next 12 months, Moody’s said yesterday in its latest industry outlook report.
“We expect a modest year-over-year growth of 0 to 5 percent in the value of nationwide property sales to June 2016, compared with a decline of 7.8 percent in 2014, driven by the policies implemented by the authorities since the second half of 2014,” said Kaven Tsang, Moody’s vice president and senior analyst.
“The growth in volume will moderate the downward pressure on selling prices, resulting from the high level of housing inventory, mainly in lower-tier cities.”
Favorable policies that will boost sales in the next 12 months include the increased availability of mortgages, lower down payments and funding costs for buyers who want to finance their second homes with mortgages, according to the report.
The banks’ lower reserve requirement ratio since February should inject more funds into the market and increase their ability to lend to home buyers and property developers.
The three interest rate cuts by the People’s Bank of China since November will trim costs for buyers who have mortgages to pay, according to Moody’s.
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