China’s property sales will likely continue to fall this year and weakness in the housing market will exacerbate debt pressures on local governments and weaker banks, according to a report by Moody’s Investors Service, reports the South China Morning Post.
The international credit rating agency said on Wednesday that the mainland property sector—still teetering under a mountain of unpaid debts, unfinished homes and stagnant sales—will remain soft this year, with negative effects on local government finances.
“Our base case is that property market weakness will persist in 2023, and that the sector’s contribution to the economy will remain materially lower over the next few years than in the past decade,” said Martin Petch, vice-president and senior credit officer at Moody’s.