China Home-Price Growth Slowed to 18-Month Low in January

BEIJING--China's home-price growth in January was at an 18-month low as a years-long tightening of the property market met with effects from the coronavirus outbreak, which has brought the world's second-largest economy to a near standstill.

The average price of new homes increased 6.45% on year in January, slowing from a 6.81% increase in December, according to calculations by The Wall Street Journal based on data released Monday by the National Bureau of Statistics.

Compared with December, average new-home prices in 70 cities increases 0.26% in January, slowing from a 0.35% on-month increase in December.

The coronavirus outbreak hit the property sales as potential buyers stayed at home and some property developers closed sales center across the country, following government orders aiming to minimize movements and stem the spread of the virus.

Daily property sales volume in 30 major Chinese cities on Feb. 10 was only 3% of the average level in the previous five years, Goldman Sachs noted.

As a steady cash flow is the liquidity lifeline for most Chinese developers, closures of sales centers may pose survival challenges to some developers with weak liquidity.

One of the country's biggest developers, China Evergrande Group, promoted sales online and offered a 25% discount for all properties on sale from Feb. 18 to Feb. 29 to shore up the sluggish housing market. The move is likely to be followed by its peers.

Prices of new homes increased in 66 of 70 cities in January from a year earlier, compared with 68 in December. New- home prices fell in 47 of 70 cities in January from a month earlier, compared with 50 in December.

Last week, cities and provinces such as Shanghai, Xi'an and Zhejiang promulgated policies including a delay in land payment, credit support and easing presale conditions to reduce the burden on developers.

Economists said the epidemic is likely to hit China's economy harder than SARS did in 2003, as China is facing more headwinds in 2020 from worsening fiscal conditions and a cooling property sector.

--Bingyan Wang


  (END) Dow Jones Newswires
  02-16-20 2150ET
  Copyright (c) 2020 Dow Jones & Company, Inc.

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