Mainland developers are in for hard times this year, but a loan default by a cash-strapped homebuilder is unlikely despite tough operating conditions and a tight credit market, say analysts.
Home prices in nearly two-thirds of the 70 mainland cities tracked by the government fell last month. The price of new homes fell in 45 cities last month, down from 48 in January, the National Bureau of Statistics said. Prices were stable in 21 cities and rose in four, it said.
Analysts said developers could make big price cuts as early as this month to encourage buyers back into the market and help generate revenues.
Predictions of a gloomy outlook for developers - but welcome price relief for buyers - came after Premier Wen Jiabao last week reiterated the government's intention to maintain the cooling measures in place for the property market.
At a press conference on Wednesday that concluded the 2012 National People's Congress meetings, Wen said home prices were still far from reasonable. Getting prices back to normal levels meant they should be in line with household income levels and matched by reasonable profits, he said.
Alan Jin, an analyst at Mizuho Securities Asia, said: 'The affirmative tone of keeping tight controls intact indicates that policy reversion may take longer to occur. Previously, the market expected this before the NPC meeting.'