China's slowing property market may be drawing comparisons with the U.S. housing bust, but some analysts are starting to call a recovery and see developer stocks as a bargain.
"I foresee price declines for less than six to 12 months and then it will come back to a recovery trend, especially for tier three cities," Carol Wu, head of research at DBS Vickers, said at an event this week for clients of DBS' private bank.
That means the shares of China's developers are in bargain territory on a 12-month horizon, she said. The sector is "really quite attractive" at around five times earnings, with even the biggest players such as Vanke and COLI trading around six to seven times earnings, compared with expectations for growth of around 10-20 percent over the next few years, she said.
Concerns that China's property market is a popping bubble have moved to the front burner recently, with home sales in the January-May period down 8.5 percent on year in value terms. Property is estimated to account for around 20 percent of the mainland's gross domestic product (GDP).