Moody downgrades China property market outlook

Moody's Investors Service in its report yesterday says that China property developers will face tough challenges in the coming short to mid term. Moody's outlook for the China property development industry for the coming 12 to 18 months is downgraded to negative reason being that uncertainty for the China property developers operation increases, a credit tightening environment and more risks from government controls.

In the report, Moody discussed about credit tightening, demand weakening and the reduced liquidity effects on China property developers balance sheets. The main author of the report 曾启贤 says that dropping of sales volume, housing prices and the land purchase in the first half of the year have caused worsening of the liquidity and financial situation in the balance sheets of the property developers.

In the past half year, Moody has released quite some negative reports on the China property developers. Before that, Moody has continuously lowered the bond ratings for 世茂, 绿城 and other China property developers.

Moody's senior credit ratings manager 蔡承业 says that with the continuous completion of ongoing projects, new houses coming into the market will have a further blow to the market. In order to stabilize the market, the Chinese government has recently announced tax cuts and relaxing of mortgage restrictions. Local governments have also taken measures to encourage people to buy houses. However, 蔡承业 thinks that there are still uncertainties on how the various governing bodies will do to the property market which increases the policy control risks for property developers.