China's housing market will continue to cool in the second half of 2017 due to stricter home purchase restrictions as well as tighter credit conditions, Fitch Ratings predicted in a latest report.
A weaker credit impulse, along with the tightening of home purchase restrictions, is likely to drag down home sales growth further in the second half of this year while home prices are likely to fall slightly amid weaker demand, according to the global ratings agency.
Nationwide, home sales will be stalling, instead of falling, in the second half of this year as the government will probably take a cautious approach to avoid causing significant volatility in the market.
On the price side, home costs in first-tier cities, where demand remains strong and land supply is tight, are expected to hold up better than lower-tier ones where demand is weaker and developers' housing inventories are higher, Fitch said.
China's housing market has been slowing with growth in new residential property sales decelerating to 24 percent year on year, on a trailing 12-month basis, in May, down for the fifth straight month from the 36.2 percent peak in December 2016. Price gains have also moderated with price of existing homes in first-tier cities rising just 3.6 percent in the first five months of 2017, compared to an annual gain of 28.7 percent in 2016, according to the report.