Slow sales growth for China’s property market in 2017, says Moody’s

PETALING JAYA (Jan 26): After posting a record high in 2016, China’s property market will show a slower pace of sales growth in 2017 on the back of Beijing’s tightened controls to curb property price growth, according to Moody’s Investors Service.

“We expect nationwide contracted sales in 2017 will be largely flat or will see a slight decline from 2016, after buoyant growth that year,” said Moody’s analyst Chris Wong in a statement.

Overall, national contracted sales value grew by 36.2% year-on-year (y-o-y) to a record high of RMB9.9 trillion (RM6.38 trillion) in 2016, driven by growth in sales volume and average selling prices.

“However, the growth pace in December 2016 slowed from that seen in the first three quarters of 2016 after the government implemented tightening measures to cool the sector from late September,” added Wong.

Looking at the effects of the cooling measures, Moody’s noted that in December 2016, 46 of China’s 70 major cities saw month-on-month price growth, down from 55 cities in November and 52 cities in October.

Meanwhile, 20 cities saw month-on-month price declines, increasing from 11 cities and seven cities over the same period.

According to Moody’s, the inventory of residential properties — as measured by gross floor area (GFA) available for sale over GFA sold — in the first- and sample second-tier cities that it tracked remained low, at around eight and six months respectively.

“The low inventory levels reduce the risk of material property price corrections in these cities in the next six months.

“Furthermore, a significant increase in the new supply of residential houses is not likely in the next six months, given the cumulative national new residential construction starts for full-year 2016 only grew moderately by 8.7% y-o-y after two years of consecutive declines,” said Moody’s.