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Covid-19 hit to China's property market 'could be more severe'
CHINA's home-price growth stalled last month and sales plunged as large swathes of the country were locked down at the height of the novel coronavirus outbreak.
New-home prices in 70 major cities, excluding state-subsidised housing, rose just 0.02 per cent in February from January, going by National Bureau of Statistics (NBS) data released on Monday. This is the smallest increase since April 2015, when the property market was emerging from a year-long slump.
The novel coronavirus epidemic "dealt a blow" to the property market, the bureau said in a separate statement.
Private data, meanwhile, showed new-home prices fell 0.24 per cent from January in 100 cities, a "temporary" decline, according to China Index Holdings.
Home sales had the steepest plunge since at least 2013, down 35 per cent by value in January and February from a year earlier, a separate data set showed.
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 half the showrooms were still closed at the end of February, said Citic Securities.
The real picture may be more lacklustre than the data shows. Nineteen cities, including epidemic epicentre Wuhan, had no transactions last month, so prices there were considered to be unchanged, the statistics bureau said.
"Home prices have been gaining more slowly for almost four years, and it makes cities with weaker fundamentals more vulnerable to the sudden shock," said Xia Dan, a property analyst at Bank of Communications. Smaller Tier-3 and Tier-4 cities may see a decline in prices this year if there are no major policy support measures, she said.
Moves to discount apartments to keep sales ticking also helped fuel the slowdown.
China Evergrande Group offered discounts of as much as 25 per cent at many of its projects last month. But 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 will not 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. BLOOMBERG