Moody's expects more property curb

Local governments are expected to roll out additional tightening measures to temper property sales and price growth in the next 12 months, Moody's Investors Service said in a report on Thursday.

While the first-tier cities tightened their measures to dampen excessive price growth, the government of Wuhan, a city in central China, announced in November new tightening measures on home purchases, making it the first second-tier city to release tightening measures in recent months.

Subsequently, other cities, such as Hangzhou, Nanjing, Changsha, Shenyang and Nanchang, also announced new measures to control price growth.

"The number of cities recording strong price gains of more than 10 percent year-on-year increased to 21 last month from 14 in September, the record high so far this year," said Franco Leung, an assistant vice president and analyst at Moody's.

More cities in China demonstrated strong property price growth in October than in September.

"Price growth was especially strong in first-tier cities, such as Beijing, Shanghai, Guangzhou and Shenzhen, but it was also robust in second-tier cities, such as Xiamen, Nanjing and Shenyang," said Leung.

In all, prices in 69 of China's 70 major cities grew year-on-year in October 2013, reflecting strong underlying demand for residential homes, according to the National Bureau of Statistics.

The Moody's report further discusses the implications of the Third Plenum of China's Communist Party leadership in mid-November 2013.

The report says that the resulting policy statements are credit positive for large property developers because they suggest a continued urbanization process, a loosening of government control over interest rates, and a reliance on market dynamics to determine resource allocation.

Large developers will also have better access to bank financing at lower cost, as the government continues to liberalize interest rates, given the banks' preference to lend to large market players with solid credit profiles.

On the subject of bond issuance by the rated property developers, Moody's expects it to continue to slow in November and December, as the calendar year end is a traditionally low season for such issues.

From Oct 21 to Nov 20, five rated developers issued a total of $2.86 billion of bonds from the international debt capital markets, an amount that was lower than the $3.67 billion raised between Sept 21 and Oct 20. Those five developers were: Wanda Commercial Properties (HK) Co Limited, China Vanke Co Ltd, Modern Land (China) Co Limited, Evergrande Real Estate Group Limited and China Overseas Land and Investment Limited.