China Home-Price Growth Slowest in 7 Months Amid Discounts

(Bloomberg) --

China’s home-price growth slowed for a fourth month in September, as cash-strapped developers cut prices to speed up sales.

• New-home prices, excluding state-subsidized housing, rose 0.53% last month from August in 70 major cities, National Bureau of Statistics data showed Monday. That’s the smallest gain since February.

Key Insights

• Prices in the secondary market, which is free from government intervention, suggest the slowdown may be more even more pronounced. Twenty-eight cities saw a drop in secondary house prices, the most in 3 1/2 years, according to Bloomberg calculations.
• The challenge for policymakers now will be cushioning the slowdown and avoiding an all-out property crash, which would be devastating for an economy growing at its slowest pace since the early 1990s.
• A prolonged housing downturn may push more buyers to the sidelines, spurring developers to offer deeper discounts to keep cash flowing in. The three-biggest home builders have almost $80 billion in short-term debt falling due by June 2020.
• Developers have offered discounts of 5%-10% at some projects to speed up sales, said Raymond Cheng, property analyst at CGS-CIMB Securities Ltd.

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• For more detail from Monday’s data, click here

Read More

• Dwindling Land Sales Pressure Local Governments in China
• China Office Vacancies Reach Decade High on Slowing Economy

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