Fitch: China’s stricter property rules will further polarize homebuilders

Stricter implementation of existing property rules will further polarize homebuilders, Fitch Ratings said in a report.

The tightened rules will lower homebuilders’ margins slightly by restricting their ability to pass on rising input costs to homebuyers.

The new rules will have no impact on homebuilders’ ratings as Fitch has already factored in the likely lower margins for homebuilders in its assessment.

The new regulations, however, will disproportionately affect smaller players with lower margins, with projects targeting speculative buyers or with high concentration in cities, which are targeted for stricter policy implementation.

Larger nationwide players, for instance China Overseas Land & Investments Ltd and China Vanke Co Ltd, will likely be less affected given their broad project mix and geographical coverage and high margins, the report said.

 

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