China Home Price Growth Slows as Virus Spread Hits Developers

(Bloomberg) -- China home prices rose at the slowest pace in almost two years in January, as sales plunged late in the month when the coronavirus outbreak worsened dramatically.

• New-home prices, excluding state-subsidized housing, rose 0.27% last month from December in 70 major cities, National Bureau of Statistics data showed Monday. That’s the smallest gain since February 2018.

Key Insights

• Home sales “fell off a cliff” as efforts to combat the virus ramped up, said Yang Kewei, an analyst at China Real Estate Information Corp. Entire cities, including Wuhan where the virus originated, were locked down, and people restricted from returning home from Lunar New Year travels.
• The slowdown has probably worsened this month as the New Year holiday was extended, developers closed showrooms and more cities went into lockdown. New apartment sales plunged 90% in the first week of February, preliminary data showed.
• Developers may start cutting prices to boost sales and maintain cashflow, said Huang Yu, research director at China Index Holdings. Bigger declines may occur in the secondary home market, which is free of government intervention, she said.
• “The virus’ impact on property is potentially the biggest risk for the rest of 2020,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “A fall in prices may lead to a self-strengthening down-cycle.”

Get More

• For more details from the data, click here and here
• China Home Sales Plunged 90% in First Week of February on Virus
• China Home Builders Offer Get-Out Clauses as Virus Skewers Sale

To contact Bloomberg News staff for this story: Emma Dong in Shanghai at edong10@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Peter Vercoe

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With assistance from Bloomberg