CHINA'S residential developers are back on solid ground, according to a report released today by Standard & Poor's Ratings Services.
The agency revised its outlook for the industry to stable from negative amid more favorable operating and financing conditions for developers.
Overall property price is expected to rise moderately in China's 100 major cities - up to 5 percent annually in terms of average selling price - while sales volume may increase more than 10 percent for larger players with good liquidity and financial flexibility.
In contrast, sales volume could remain sluggish for smaller developers, many of which have fewer available projects after cutting back on land purchases and construction over the past two years due to limited funding, S&P predicted.
"We don't expect drastic changes to existing housing controls this year but it is possible for the government to make some policy finetuning," said Fu Bei, an S&P credit analyst.
"And we believe the government's actions will remain somewhat supportive of the industry so that the economy's orderly recovery can be facilitated."
While liquidity pressure could continue to constrain the ratings on some companies - mainly smaller players - overall liquidity has improved as financing channels have opened up.
More developers are likely to tap the offshore markets in search of cheaper funding costs while access to onshore bank and trust funding should be easier than last year, S&P said.
The ratings firm also said it expects more positive rating actions than in the past 18 months.