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Moody's: 4-month contracted sales value in China slows to 9.5%

The growth in China's national contracted sales, based on sales value, declined in the first four months of 2018 to 9.5% from the 11.4% registered in the 2018 first quarter, said Moody's Investors Service, highlighting the stricter credit conditions and regulations as the cause for weakened demand.

The report also noted a slight increase in inventory levels in April from March in tier 1 Chinese cities, where property prices dropped 1.0% year over year during April, versus the 0.6% fall in March.

Over at tier 2 cities, property prices increased 4.8% year over year in April, as compared to 4.7% in March, while inventory levels remained "largely" flat.

For the full year, growth in residential property sales and prices across China is projected to decelerate, according to Cedric Lai, a Moody's assistant vice president and analyst. Moody's is also of the view that developers' gross margins will continue to be limited over the following 12- to 18-month term by high land prices and property price caps in many tier 1 and tier 2 cities of China.