China home-price growth slowest in seven months amid discounts

[SHANGHAI] 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 per cent last month from August in 70 major cities, National Bureau of Statistics data showed Monday. That's the smallest gain since February.

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The slowdown may be even more widespread. A report Friday showed average home prices across the country fell 0.4 per cent last month, signaling weakening prices in smaller cities not included in the 70-city index.

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 USUS$80 billion in short-term debt falling due by June 2020.

Developers have offered discounts of 5 per cent-10 per cent at some projects to speed up sales, said Raymond Cheng, property analyst at CGS-CIMB Securities Ltd.

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