China's property prices have cooled due to tight controls in major cities and are expected to continue the trend in the short term, a report has said.
"Price growth in first and second tier cities is likely to remain muted in the next six to twelve months as the current tight regulatory measures are unlikely to be loosened," Kaven Tsang, Moody's Vice President and Senior Credit Officer, said in the report.
Home prices in China's four tier-one cities declined for the first time in 2017 by 0.3 percent month-on-month in August after staying flat in June and July, in contrast with the 2 percent to 4 percent average monthly growth recorded prior to September 2016, when the government started a wave of restrictions.
Meanwhile, tier-two cities reported slower month-on-month rises in both new and existing homes.
Nine cities have introduced new regulatory measures recently. In particular, tier-two cities, including Chongqing, Nanchang and Shijiazhuang, are prohibiting newly bought properties from being resold for a fixed period.
The ratings agency believes sales growth also slowed and inventory are piling up. Given the situation, it issued negative rating outlooks for 14 property developers as of the end of September, accounting for more than a quarter of its rated developers.
But Moody's expects the number of negative outlooks to decline modestly in the next 12 months due to recovered sales, improved margins and lower funding costs.