Business / Industries

House prices cool, sales plummet

By Hu Yuanyuan (China Daily) Updated: 2014-04-02 08:33

Xingrun, a developer based in Ningbo, Zhejiang province, went bankrupt in March when it was unable to service more than 3.5 billion yuan in outstanding debt.

"The bankruptcy appears to be an isolated incident, but it highlights the vulnerability of small, highly leveraged developers with weak sales execution abilities and high refinancing needs," said Tsang.

House prices cool, sales plummet

Following the bankruptcy, Moody's believes financiers and investors will become more selective and favor borrowers with relatively strong credit quality, thereby further pressuring the liquidity of financially weak developers.

Standard & Poor's Financial Services LLC believes consolidation in the Chinese property sector will accelerate this year, given recent events that will widen the credit differentiation among strong and weak players.

As for products, those that have a similar location and floorplan to government-subsidized housing will suffer most, while high-end projects will not be affected, said Zhang.

Developers of luxury property projects in Beijing, in fact, may further increase prices because of limited supply.

"We have only 34 units left and the number of potential buyers is higher than that amount so the sales price may climb further," said a marketing manager with Guangqu Jinmao Palace, a high-end project along Beijing's East Fourth Ring Road.

First-tier cities will remain a safer choice given the strong purchasing power of buyers and the limited supply of properties. But for some third- and fourth-tier cities, where supply has exceeded demand, a market correction is very likely, said Zhu Haibin, chief economist in China at JPMorgan Chase & Co.

"House-price inflation will moderate in 2014 because of continued credit tapering and supply adjustments. Regional differentiation will remain the main theme through this year," said Zhu.

Previous Page 1 2 3 Next Page

Hot Topics

Editor's Picks
...
...