China Property Outlook: A Long Last Dance

Jul 11, 2018 09:00 JST

Source: CCB International Securities Limited

HONG KONG, Jul 11, 2018 - (ACN Newswire) - CCB International Securities Limited (CCBIS) released an analyst report for the 2018 China property market outlook in early July.

According to the report, the boost in transaction volume in the primary market would be short-lived prosperity, and price performance in the secondary market is not likely to withstand as some tier-one cities such as Beijing and Shanghai are seeing diminishing purchasing power from high property prices, rising mortgage rates, and a lack of demand. Considering these reasons, CCBIS believes there is a high chance that tightening measures will soon arrive and contract volume and price growth in the secondary market, where home prices are rising rapidly.

Though a correction of the property market would be a nationwide movement, CCBIS expects a regional short revival will take place in the Pearl-River-Delta (PRD) region based on the expectation of an announcement of a detailed plan supporting Greater-Bay Area development. Due to the expectation that the government is less likely to tolerate any form of excessive property price growth, it may take action long before speculative buyers do.

Amid the prosperity lies a nationwide downtrend of home prices and volume. Home buyers are expecting potential policy loosening in the hope that the government supports the real estate sector to sustain overall economic growth, while once the tension between China and the U.S eases, the government will reiterate a tight property policy. At this point, CCBIS remains "Neutral" on the China property sector and recommends investors stay defensive and buy quality SOEs with strong balance sheets.

CCBIS' top picks are China Overseas Land (688.HK), China Resources Land (1109.HK), and Jinmao (817.HK).

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Source: CCB International Securities Limited
Sectors: Daily Finance, Daily News