China's property sector will remain stable, but competition will intensify as sales slow and liquidity tightens, said a Moody's report on Monday.
China's national contracted property sales will slow from the high level in 2016 but remain within the parameters for a stable outlook, and inventories will remain low in high-tier cities and support property prices, said the report.
However, the report noted that the government's wider implementation of home-purchase restrictions since September 2016 will slow sales and tighten developers' liquidity gradually, leading to more competition.
The competition resulting from slowing sales, and tightening liquidity and regulation will be exacerbated by developers' continued focus on high sales growth in 2017, said the report.
In addition, the report said that developers' focus on large cities has increased competition for land, pushing up land prices and squeezing profit margins.
The report forecast that Chinese government will maintain tight home-purchase controls in cities where property prices are rising rapidly and accommodating policies in cities where inventories are high, as part of its ongoing effort to maintain the stability of the property sector.