Moody's: National sales growth of Chinese property to remain resilient for the rest of 2015

Moody's Investors Service says that national sales growth of China's (Aa3 stable) property sector will remain resilient for the rest of 2015, and expects that rated developers will outperform the broader sector during the same period.

"We expect our rated developers to launch more projects for sale and take advantage of the current strong sales momentum," says Stephanie Lau, a Moody's Assistant Vice President and Analyst.

Lau was speaking on the release of Moody's latest "China Property Focus".

According to China's National Bureau of Statistics, year-to-date national contracted sales growth further improved in August 2015, with cumulative contracted sales registering year-on-year growth of 18.7% ( trillion) in the first eight months of 2015, up slightly from 16.8% ( trillion) in the first seven months of 2015.

Sales in August registered 31.5% year-on-year growth, the fifth consecutive month that recorded a positive movement.

Moody's notes that the growth in August was mainly driven by growth in sales volumes, which was also the case in July.

And the pick-up in sales was due to supportive monetary and regulatory polices implemented since 2H 2014.

"These favorable policies -- including the increased availability of mortgages, as well as lower down-payments and funding costs to buyers financing their second homes with bank mortgages -- will support overall sales over the next 12 months and help maintain healthy year-on-year growth for the rest of 2015," says Lau.

And residential home prices continued to recover in August 2015 in China's 70 major cities, according to the report.

In particular, the pace of price declines on a month-on-month basis moderated, with 26 of the 70 cities reporting falls in August, down from 29 in July.

For the first time in 12 months, all four first-tier cities recorded positive year-on-year price growth.

Moody's expects that pressure on home prices will continue to ease gradually through 2015.

The report also notes that the financial metrics of Moody's-rated Chinese property developers in 1H 2015 were largely stable -- and in line with expectations -- when compared with the developers' financial metrics at year-end 2014.

Moody's-rated developers adopted a more cautious approach to business expansion during 1H 2015. Such an approach slowed their debt growth to a level in line with the growth in contracted sales and revenue.

Against this backdrop, the developers' financial metrics showed some signs of stabilization in 1H 2015.

The main topics covered in the latest China Property Focus are:
o National Sales Growth to Stay Robust for the Rest of 2015
o Residential Home Prices to Continue Recover
o 1H Results Show Signs of Stabilization Amid China's Economic Slowdown
o Liquidity Index Increased Marginally in August 2015