New | Moody’s upgrade China property outlook to stable on modest sales growth

Global ratings agency Moody’s on Tuesday upgraded its outlook for China’s property market to stable from negative as it expected a pickup in nationwide property sales revenue of up to 5 per cent in the next 12 months due to strong policy support.

The agency had downgraded its outlook to negative in May 2014, three months after the mainland’s once-sizzling real estate market cracked under oversupply resulting from years’ of breakneck debt-driven expansion.

Its expectation for a rise in property sales also contrasts to prediction for a fall of up to 5 per cent in 2015 when it issued last report in late 2014.

“We expects property sales in China to show modest growth over the next 12 months – after recording a fall in 2014 – as the effects of supportive monetary and regulatory policies implemented since the second half of 2014 start to gather momentum,” Moody’s said.

Chinese local governments started relaxing home purchase restrictions in the second half of last year. The central authorities ended its tightening stance against the real estate sector at the end of September and have since cut interest rates three times while also lowering down payment requirements to boost demand for first and second home purchases.

China’s property sales revenue fell 3.1 per cent in the first four months from a year earlier. Last year, property sales fell 6.3 per cent, as compared with a rise of 26.3 per cent in 2013.