China's home price growth accelerates in second-tier cities

    Moody's Investors Service said that home prices for China's (Aa3 negative) 70 major cities extended their rising trend in August 2016, a development that could attract further regulatory tightening in some second-tier cities.
  "Robust price growth in Hangzhou, Xiamen, Wuhan, Nanjing, Zhengzhou and Suzhou in the past 6-9 months triggered regulatory tightening in their residential property markets in August and September this year" said Franco Leung, a Moody's Vice President - Senior Credit Officer.
  "We expect more restrictive measures will be put in place if the implemented measures do not effectively curb demand for property investments or moderate property price growth in these cities," added Leung.
  Moody's conclusions were contained in the latest edition of its China Property Focus newsletter.
  According to the report, prices in Xiamen grew the most, at 44.3% in August year-on-year, followed by Hefei and Nanjing at 40.5% and 38.8%, respectively.
  And for the eighth consecutive month, all four first-tier cities posted double-digit year-on-year-price growth. On average, Shanghai, Shenzhen, Beijing and Guangzhou registered year-on-year growth of 30.5% in August compared to 29.2% in July.
  At the same time, the number of cities that registered home price declines dropped further to 6 in August from 11 in July, and none of the cities registered year-on-year declines of more than 5%.
  The Moody's newsletter also comments on the 1H 2016 results of the rated Chinese property developers, which -- although slightly weakened from 2H 2015 -- signal overall stable metrics for the full year 2016. The recovery in the developers' metrics will be supported by reduced destocking pressure, higher completion rates and lower funding costs.
Healthy sales growth should also continue in 2H 2016, but at a slower pace than in 1H 2016.