Strong returns spur $10b bonanza in builder bonds

"Investor expectations about the property industry are changing," said Xu Hanfei, a bond analyst at Guotai Junan Securities Co, the nation's third-biggest brokerage in Shanghai.

"Also, the national association's requirement means that issuers should have relatively better credit quality."

Demand has been strong for property bonds issued on the exchange market this year.

The rate on Hubei Fuxing Science & Technology Co's 2019 bond has dropped to 7.21 percent, after issuance on Aug 25 with a 9.2 percent coupon, according to exchange data.

"Not all the new property bonds are worth investing in," said Li Ning, a bond analyst at Haitong Securities Co, the nation's second-biggest brokerage.

"Given the risks the industry is facing, investors should only choose those top developers which have projects in first-tier cities nationwide."

There have been some signs of improvement in the property market. Home sales in September jumped 40 percent from August, the biggest increase this year, according to Bloomberg News calculations, based on a government report last week.

New home prices continue to fall	Turning point in sight for ailing housing sector after credit easing