Weak China property sales to continue into Q2: Moody's

Sales in China's residential property market will remain weak into the second quarter, said Moody's in a research note released this week.

"The weak contracted sales will continue into the second quarter resulting from tight bank liquidity and weakened market sentiment in the China property market after news of price cuts in certain cities and an expectation of weaker economic growth," says Franco Leung, a Moody's Assistant Vice President and Analyst.

Official data showed that total contracted sales in China's residential property market declined 7.7 percent year on year in the first quarter to 1.1 trillion yuan ($180 billion).

The decline was partly because of the high base in the same period in 2013, when contracted sales rebounded strongly after the down cycle during second half of 2011 and first half of 2012, according to the research note.

Nevertheless, the international credit rating agency said contracted sales for its tracked developers in China rose 13.2 percent year on year to 268.6 billion yuan in first quarter because of the strong sales performance of a few major developers.

Moody's expected contracted sales of many of its rated Chinese property developers will continue to outperform the market due to their favorable market positions and strong sales execution.