Standard & Poor's Ratings Services revised Chinese property developers' outlook to "stable" from "negative" on Wednesday, on growing sales, falling funding costs and stronger balance sheets.

The ratings agency said the financing and operating conditions of China's real estate industry should remain stable over the next six to 12 months, in contrast with the tough times many developers faced in recent years due to tightening policies.

In the long term, however, the agency has always been "positive" about the sector, which is set to cash in on China's rapid urbanization.

"China's residential real estate developers are on less shaky terrain this year," Standard & Poor's credit analyst Bei Fu said at a conference on Wednesday.

"Property sales have strengthened and more developers are able to improve their liquidity at favorable costs because funding channels have reopened."

China's property market has been heating up again since the second half of 2012. During last week's Lunar New Year holiday, home sales in 27 major cities jumped six-fold from a year ago, according to SouFun Holdings, one of China's leading real estate Web portals.

Land sales leapt nearly three-fold in the month, with land remise fees hitting 56.2 billion yuan ($9.02 billion).

Prices also shot up, with new home prices rising 1 percent in January from a month earlier.

Fu said he expects prices to rise by up to 5 percent in 2013.

The price hike comes as developers flock to a new source of funding: the dollar bond market.

Dollar bond sales by Chinese property companies totaled more than $6 billion in January, nearly matching the whole-year issuance of $7 billion in 2012, as global investors seek to cash in on China's economic recovery.

Shimao Property Holdings, Kaisa Group Holdings and Country Garden Holdings, were among a slew of developers that have offered dollar bonds this year.

Funding costs are dropping amid investor eagerness. Industry leader Country Garden Holdings, for example, just issued 10-year bonds at a 7.5 percent coupon, 4.25 percentage points lower than the coupon on its 5-year bonds in 2009.

"Development in the dollar bond market is helping the sector get on a better footing financially," said Fu.

However, real estate companies suffered a sudden dip on the equity market recently, as investors expect new tightening policies on the back of rising prices.

Local media reported that new measures could come out as early as Thursday, which will raise payment and mortgage rates for buyers of second homes.

S&P said it doesn't speculate on government policies, but believes that there will be no drastic tightening or loosening in the real estate industry this year.

"But the government may slightly adjust some measures, if price growth accelerates," said Fu.

On Tuesday, the Shanghai Stock Exchange's property index lost 4.6 percent, its biggest drop since Aug 2. The index recovered slightly on Wednesday, with a 0.85 percent gain, which came amid a 0.6 percent increase in the benchmark Shanghai Composite Index, to 2,397 points.

gaochangxin@chinadaily.com.cn