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China home prices little changed last month amid virus shutdown

[SHANGHAI] China home price growth stalled last month when large swathes of the country were locked down amid the height of the coronavirus outbreak.

New-home prices in 70 major cities, excluding state-subsidised housing, rose just 0.02 per cent in February from January, National Bureau of Statistics data released Monday showed. That's the smallest increase since April 2015, when the property market was emerging from a yearlong slump

The coronavirus epidemic "dealt a blow" to the property market, the bureau said in a separate statement.

China's home sales slumped last month as more than 100 cities went into lockdown to contain the virus. Developers were forced to close display units to avoid gatherings of large numbers of people, and almost 50 per cent of showrooms were still closed at the end of February, according to Citic Securities.

The real picture may be more lackluster than the data shows. Nineteen cities, including epidemic epicenter Wuhan, had no transactions last month, so prices there were considered to be unchanged, the statistics bureau said

Moves to discount apartments to keep sales ticking over also helped fuel the slowdown. China Evergrande Group offered discounts of as much as 25 per cent at many of its projects last month, and while sales surged, its average selling price declined 3 per cent

The question now is whether the downturn will be long-lasting, or the market will snap back quickly as the lockdowns are lifted and life returns to normal

Property bear Larry Hu, head of China economics at Macquarie Securities, says the market was already weakening before the virus outbreak, and government support measures won't be enough to turn it around

Analysts at Jefferies Hong Kong have an opposite view, saying sales will improve substantially in March and may even record year-on-year growth in April.

Private data showed new-home prices fell 0.24 per cent from January in 100 cities, a "temporary" fall, according to China Index Holdings.