2010-11-26 10:28

China will intensify its property tightening drive in 2011, pushing house prices down moderately, China Minsheng Banking Corp said on Thursday.

Curbs rolled out so far, including higher down payments and mortgage rates, have failed to shake stubbornly high home prices, according to a report by the bank's specialist property team.

"Regulators may continue to check how policies on loans to home buyers and developers are being implemented and seriously punish violators in a timely manner," it said. "It is highly likely that property prices will see a correction in 2011."

Meanwhile, as home buyers retreat to the sidelines, developers are suffering from rising inventories, tighter cash flow and higher debt ratios, according to the report.

The bank's sample of 73 Chinese property firms listed in Shanghai and Hong Kong showed their net liability ratio reached a five-year high of 43 percent at the end of June; their ratio of cash to debts due this year fell to 1.6 from 2.2 at the end of 2009. The report did not provide more recent data.

The mid-sized lender expects China to raise interest rates by 50-90 basis points in 2011 and to cut its lending target to 6-7 trillion yuan from 7.5 trillion yuan this year. Loan growth to the property sector will slow accordingly, Minsheng said.