Home prices likely to fall in some smaller Chinese cities in 2019: Fitch report

Source:Reuters Published: 2018/11/20 20:13:41

Home prices in some smaller Chinese cities could fall next year, Fitch Ratings said on Monday.

Nationwide growth in China's property prices has moderated this year in response to the government's measures to curb speculation.

However, many investors are still exploiting regulatory loopholes, turning to smaller and less restrictive cities.

A slower growth rate in the economy, however, is threatening to further chill the sector, which is a significant growth driver.

Property sales by floor area have been declining month-on-month, though they are still higher this year on the whole compared with 2017.

Homebuilders are likely to face more difficult market conditions in 2019, with slowing economic growth and deteriorating sentiment likely to drag down sales volumes and stifle home-price gains, Fitch said in a statement, after cutting its outlook on the sector to negative from stable.

Property developers, in a bid to spur sales, have tried to manipulate prices, deliberately postponing sales to prop up prices, illegally providing loans for down payment or even publishing false price information, according to the Chinese government.

Sales volumes may fall up to 10 percent, following low-single-digit gains in 2018, with declines likely to be the strongest in lower-tier cities, it said.

Smaller cities will be most affected by the scaling back of monetized resettlement of shanty-town residents, according to Fitch Ratings.

Lower-tier cities have been broadly driving price gains in the overall market this year, partly due to China's long-term campaign to modernize housing developments.



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