... sentiment is negative, and local uncompetitive developers will be forced out or merged with strong, well-managed developers. The restructuring is caused by tighter onshore funding and weak demand in some lower-tier cities. Negative performance in 2014 may push local governments to offer more benign housing policies, while the housing purchasing restrictions (HPR) in general are not likely to be suspended nationwide before mature and stable alternates are in place to curb speculation. Oversupply Mitigated by Restructuring: Fitch Ratings believes the restructuring will limit the risk of potential housing oversupply and improve the long-term health of the sector. We estimate that if new construction maintains the same growth rate as in the past seven years, the risk of nationwide housing oversupply will be substantial by 2020, which would lead to a "hard landing" ¡ hurting developers sales and margins substantially. Therefore, a record...
