Last month we reported statistics from real estate adviser DTZ showing house sales in Chinese first tier cities plunged 64.6 percent in the month of February. Such a sizeable fall was expected to have an impact on prices.
Business China has now reported the prices of new homes in Beijing has fallen 26.7 percent month on month in March 2011. This is the first fall in new house prices in 19 months, and quite a sizeable one at that.
Moody’s investor service has today downgraded the outlook for China’s property sector to negative. It said “During the next 6-12 months, Chinese property developers will face challenges in securing debt financing, as the government enforces its strategy of slowing monetary growth to reduce the risk of accelerating inflation and to manage domestic banks’ exposure to the property sector,”.
Moody’s downgrade follows ratings agency Fitch who earlier this week downgraded China’s local currency debt rating to negative saying it “reflects concern over the scale of sovereign contingent liabilities and risk to macro-financial stability arising from the very rapid pace of bank lending in recent years, especially against the backdrop of rising real estate valuations and inflation.”
» Beijing Home Prices Drop for First Time in 19 Months in March – Business China, 12th April 2011.
» Moody’s downgrades China property sector to negative – Reuters, 14th April 2011.
» Fitch downgrades China’s yuan debt outlook to ‘negative’ – Agence France-Presse, 13th April 2011.