China Property Market

[BlueKelah]

Yes con the world with fake gdp from such ghost city projects funded by debt. Their stock market is the final place, next financial crisis china for sure now...

things just get more and more ridiculous overseas
http://www.mingtiandi.com/real-estate/ou...n-seaside/


good thing SG gov is not allowing them in.


via Galaxy Tab S with Tapatalk

[Boon]

Top 5 features of China's property market
Dai Tian
China Daily/Asia News NetworkFriday, Apr 03, 2015

Chinese authorities have eased mortgage lending terms and housing taxes to boost the property market and add fuel to overall economic growth.

The People's Bank of China lowered the minimum down payment for second homes from 60 to 40 per cent on Monday, while the Ministry of Finance announced its plan to cancel sales tax on pre-owned homes sold two years or more after purchase.

International rating agency Moody's expects such policy easing to alleviate downside pressure on property sales, which declined by 16.7 per cent in the first two months of this year.

1. Decline in national contracted sales to ease for rest of the year

Moody's expects nationwide home sales to record a narrower year-over-year decline of between 0 and 5 per cent compared to 7.8 per cent in 2014 because of the greater availability of mortgages and improved buyer's sentiment following supportive policies.

China's property market retained a downturn in the first two months of 2015, as contracted sales declined by 16.7 per cent year-over-year to 4.98 trillion yuan, according to the National Bureau of Statistics.

The volume decline was higher than expected, but was partly because many homebuyers made their purchases before year end when developers actively launched new sales projects, Moody's said in a note.

2. Residential home prices will remain under pressure

The rating agency expects residential home prices to remain under pressure over the next few months as developers continue to offer price incentives for projects, said Moody's in a note on Mar 24.

Housing prices remained downward in February, as 52 cities surveyed registered a more than 5 per cent decline in home prices, compared to only 38 in January.

According to the report, Hangzhou's decline for the eleventh consecutive month of 0.4 per cent was a result of developers' price discounting activities aimed at reducing inventory.

3. Offshore bond issuance among developers to slow following the Kaisa incident

Offshore bond issuance among developers has significantly slowed since the beginning of this year, as the rating agency reported that only six issuers tapped the offshore bond market, while 20 made issuance for the same period last year.

Kaisa's financial troubles elevate risks for Chinese developers, said Moody's in the note, adding that it expects offshore funding costs to remain high over the coming months, potentially causing interest coverage ratios to deteriorate.

"Offshore markets remain an important funding channel for rated Chinese developers, accounting for an estimated 30 to 35 per cent of total debt," said the report. Total issuance among rated developers this year as of Mar 24 fell to US$4.7 billion (S$6.4 billion) from $9.2 billion during the same period last year.

4. Liquidity remains stable

Moody's expects most rated developers to meet repayment obligations, but casts doubt over the debts of Glorious Property Holdings,

Kaisa Group and Renhe Commercial Holdings. "We expect high uncertainty for Glorious Property's $300 million senior notes due in October 2015, given its inadequate liquidity and weak contracted sales in 2014," said the report, adding that Renhe's liquidity position also remains fragile.

5. Mortgage policy easing will support the real estate sector

China's easing of mortgage lending terms and housing taxes will alleviate the downside pressure on property sales, said Moody's in a note on Tuesday.

While the current policy relaxation will boost sales volume in the near term, developers' pricing power is expected to remain limited as market inventory is high and developers with weak liquidity will take the opportunity to offer promotions, the report added.

http://news.asiaone.com/news/business/to...rty-market

[cfa]

Moody has been very negative on China property sector for years. One famous World leader ever asked this :

The rating agencies rate others but who rate them ?

[Behappyalways]

China developer Evergrande classifies debt as equity, cuts leverage
http://www.cnbc.com/id/102579628

[Behappyalways]

(If the buyer ask for a refund and got it, then the initial payment is an interest free loan)

Homebuyers purchasing newly built homes in China typically pay for the apartment before the property is built, and then move in a year or so later after the project is completed.

What Developer’s Refund Offer Says About China’s Property Woes
http://blogs.wsj.com/chinarealtime/2015/...erty-woes/

[BlueKelah]

China Vanke’s Profit Drops as Revenue Slumps Amid Property Curbs

[Behappyalways]

Origins of Kaisa Default in China Sought in Accounting Footnotes
http://www.bloomberg.com/news/articles/2...s-i9bv09mr

[greengiraffe]

For the People's Bank it's all about property

560 words
12 May 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.
Shanghai | Like most aspects of the Chinese economy, Sunday night's move to cut official interest rates was all about property.

Despite signs of stabilising in recent weeks, the housing market remains the biggest worry for those in Beijing trying to navigate the county's tricky economic transition.

By cutting the benchmark one-year lending rate by 25 basis points to a record low of 5.1 per cent, the People's Bank of China (PBOC) is trying to shore up property prices outside the major cities.

It's easy to see why.

Fitch Ratings estimates that while real estate makes up around 15 per cent of the economy, it is used as collateral for a sizeable 40 per cent of all loans in the banking system. That means any sustained downturn in the property market would have a big impact on the health of the banking system.

"Property exposure is the biggest threat to the viability of China's banks," Fitch said in a report published last week.

And while Fitch views a "protracted downturn" as a "low probability", it appears the central bank is not taking any chances.

It wants to lower borrowing costs for property developers and those holding residential mortgages in an effort to keep the sector ticking over.

The PBOC is trying to avoid the housing market unravelling as chronic oversupply could trigger further price falls which then cascade through property developers, households and into the banking system.

While this threat is viewed as manageable, the challenge should not be underestimated.

Zhu Min, a deputy director of the International Monetary Fund and former PBOC official, made this clear in Washington last month.

He said prices were still too high and the Chinese property market would continue to "face downward pressure" as there was a staggering 1 billion square meters of vacant commercial and residential property across the country.

To put this figure into context, it's the equivalent of 2380 Shanghai Towers - China's tallest building at 128 floors.

Much of this surplus stock is outside the major cities and is a function of the post-2008 building boom when Beijing pumped stimulus into the economy to avoid a hard landing during the global financial crisis.

This stimulus must now be absorbed and is showing up in lower prices.

A survey by the China Index Academy on May 1 found that property prices in 100 cities were broadly flat in April, but were down 4.5 per cent over the past 12 months.

The severity of this downturn is masked by double-digit growth in the likes of Shanghai, Beijing and Guangzhou, while other cities are experiencing sizeable falls.

The government's own figures make this point. In March the National Bureau of Statistics said prices had fallen in 50 cities across the country over the previous month, were flat in eight and had risen in 12.

The worry is that prices keep falling in these 50 cities and suddenly the government is dealing with a full-blown housing crisis.

And so Beijing needs to keep the music going and is do so by encouraging buyers to return to the housing market.

This partly explains why the PBOC has cut lending rates three times in six months and the government has relaxed property restrictions.


Fairfax Media Management Pty Limited

Document AFNR000020150511eb5c0002c

[Big Toe]

In china right now, 2nd and 3rd tier cities is experiencing a decline in prices. There is little value in these cities and wages are lower and not a lot of jobs can be found.However 1st tier cities property prices are still increasing and is showing no signs of weakness, especially in cities like shenzhen, which is made up of Migrant population and borders H.K.
Visited a shenzhen suburb condo, quite a distance away from the city, but near MRT, all sold, size was smaller than a 4rm HDB, priced at SGD 600K. Shanghai has a population of 20+Million, is bustling with commerce and activities, there is just so many people and companies wanting to be there. It's a hard to see a decline in prime property prices unless GDP slows significantly

I think the observation is consistent with the report.
"Much of this surplus stock is outside the major cities...
The severity of this downturn is masked by double-digit growth in the likes of Shanghai, Beijing and Guangzhou,"

[specuvestor]

Thats why blunt monetary policy have to be coupled with structural policies. I'm sure the govt is smarter than me to keep or increase structural anti-speculation measures in place in tier one cities, like LTV, property related tax, purchase restriction, etc; while other cities to benefit from lower cost of funds