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Housing Sales May See 20-30% Decline This Year: Fitch

Overall, Fitch Ratings has assigned a negative outlook to almost one third of the Asia Pacific (APAC) corporate sectors for 2017.
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Fitch changed its outlook on Indian housing sector to negative from stable.
Fitch changed its outlook on Indian housing sector to negative from stable.
New Delhi: Residential property sales in India are expected to witness at least 20-30 per cent dip in 2017 due to the impact of demonetisation, Fitch Ratings said on Monday.

In its report titled "2017 Outlook: Asia-Pacific Corporates", Fitch changed its outlook on Indian housing sector to negative from stable.

"We changed our sector outlook on Indian homebuilders to negative, from stable, after the authorities took steps in November 2016 to demonetise large-denomination bank notes," the report said.

One goal of demonetisation is to curtail undeclared wealth, which will take its toll on home demand, said the agency.

"Fitch expects residential property sales of most Indian homebuilders to weaken by at least 20-30 per cent this year," according to the report.

It said Chinese homebuilders had the only positive sector outlook in the Asia Pacific in 2016.

"We have revised it to neutral in 2017 to reflect policy intervention to clamp down on speculative and investment demand for residential properties," it added.

For China, Fitch expects housing sales to decline 15 per cent in 2017.

Overall, Fitch Ratings has assigned a negative outlook to almost one third of the Asia Pacific (APAC) corporate sectors for 2017.

Growth across Asia remains high by global standards, but has slowed in recent years, particularly in China, it said, adding that external factors, such as the strong US dollar, weak global trade, and political uncertainty in the US and Europe, are presenting challenges, it said.

Besides, unfavourable policy changes, overcapacity and rising competition are among other difficulties posing challenges the countries in the Asia Pacific, Fitch Ratings said.

As per the report, Chinese steel exports are likely to stay strong in 2017 and will contribute to global over-supply.

"India's government eased import pressure on Indian steelmakers by imposing minimum import prices last year, but capacity utilisation remains low and rising production costs are adding to strains."

Overcapacity in APAC's thermal-coal market suggests the recent coal-price rally is likely to prove unsustainable, it added.

As per the outlook, some sectors face increased competition in an already-difficult growth environment. Chinese retailers, for example, are losing customers to new shopping formats, particularly e-commerce, at a time when weakening consumer sentiment is affecting sales in a number of consumer categories, said the ratings firm.

"New entrants into telecoms markets in India, Malaysia, and Singapore will put added pressure on incumbents that are already grappling with rising capex needs," it added. 

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