China property recovery fails to gain traction as prices decline

[BEIJING] The recovery in China's property market remains fragile, with new-home prices rising in only one more of 70 cities tracked by the government last month and recording their biggest year-on-year decline ever.

Prices fell in 64 cities from the previous month, compared with 65 in December, and were unchanged in four, according to data from the bureau of statistics on Tuesday. Average prices fell 5.1 per cent from a year earlier, the biggest drop on record, according to Tom Orlik, chief Asia economist at Bloomberg Intelligence. Ganzhou, in central China's Jiangxi province, joined Shenzhen in posting an increase in January from December.

The nation's first interest-rate cut since 2012 in November and the removal of property curbs have yet to revive an industry that became a drag on economic expansion last year. New-home sales by area slumped 31 per cent in January from December in 40 cities tracked by Centaline Group, as developers slowed project offers in a traditionally weak season for the property market.

"It remains a big question if the more supportive housing policies can indeed bring around the property market," Jinsong Du, a real estate analyst at Credit Suisse Group AG in Hong Kong, said by phone. "Housing inventories remain fairly big." Prices fell in 69 cities from a year earlier, compared to 68 in December, according to the data.

Existing-home prices fell in January in 61 cities from the previous month, compared to 60 in December. They rose in six cities from eight a month earlier.

"The latest signs suggest that has not been enough to revive growth," Orlik of Bloomberg Intelligence said on Tuesday. "Sales, new construction and prices are all falling, dragged down by a continued slowdown in lending growth." The average new-home price in 100 cities tracked by SouFun Holdings Ltd. rose 0.2 per cent in January from December, the first such increase since May last year, according to China's biggest real estate website.

BLOOMBERG