[ET Net News Agency, 17 May 2018] Moody's Investors Service said that the latest round
of demand-side regulatory measures to cool China's residential property market are
negative, but manageable for the country's rated property developers.
"The tightening measures announced so far this year have affected mostly lower-tier
cities in China, to which our rated developers typically do not have material exposure,"
said Franco Leung, a Moody's Senior Vice President.
"The moves are also in line with our expectation that local governments will continue to
fine tune policies to stabilize property prices and discourage investment and speculative
demand," added Leung.
Moody's conclusions are contained in its just-released report "Property -- China: Latest
regulatory measures are manageable for Chinese property developers".
In the latest news, on 14 May, the local government in Dandong in Liaoning Province
announced a ban on the resale of properties within two years of their purchase.
Moody's estimated that 11 cities and one province, largely in lower-tier cities in
China, have tightened demand-side measures since the beginning of 2018.
Hainan Province has introduced the strictest measure so far this year, in late April,
following the announcement by the central government that it would support the
establishment of a free trade zone on the island.
However, Moody's believes that the rated developers with a meaningful exposure to Hainan
Province have adequate financial and operational flexibility to buffer against the
expected slowdown in sales.
Moody's continues to expect the value of nationwide property sales, on a 12-month
rolling basis, to fall slightly through June 2019 from their high in 2017, amid ongoing
regulatory measures and tight credit conditions.
In addition, Moody's does not expect the government to relax its controls over the next
6-12 months as it continues to aim at preventing a run-up in property prices.
However, most of the 58 Chinese residential property developers that Moody's rates --
particularly those that are large and financially healthy -- will continue to outperform
the broader market in terms of contracted sales and grow their market share, underpinned
by their strong sales execution, diversified land banks and good access to funding. (KL)