March 10 (Bloomberg) -- Chinese home prices fell by a record last month, paced by a 15 percent plunge in the southern export hub of Shenzhen, where factories closed as growth in the world’s third-biggest economy slowed.

The 1.2 percent decline in prices in 70 major cities is the most since the government started issuing the data in August 2005, according to Bloomberg’s compilation of National Development and Reform Commission figures. New-home prices fell 1.8 percent, the commission said on its Web site today.

“The downtrend is more evident,” Hingyin Lee, director of research and advisory at Colliers International in Shanghai, said by phone today. “We expect the price downtrend to continue because of supply; there are still a lot of unsold apartments.”

The drop in prices reflects cuts by developers to lure buyers as China’s economy expanded at the slowest pace in at least seven years and exports declined by the most in almost 13 years. Chinese builders reported higher sales transactions in February, after a smaller gain in January, when markets were closed for the weeklong Lunar New Year holiday.

China Vanke Co., the country’s biggest developer by market value, said yesterday sales rose 150 percent in February from a year earlier to 3.9 billion yuan ($570 million), after a 19 percent increase in January. Poly Real Estate Group Co., China’s second-biggest developer, said yesterday that February sales almost tripled on year.

Closing Factories

Vanke shares fell as much as 4.4 percent to 7.54 yuan today, and were 2.2 percent lower at 11:30 a.m. Poly Real Estate lost as much as 2.9 percent to 19.80 yuan before rebounding to trade 0.4 percent higher. Gemdale Corp., a developer based in Shenzhen, slid 4.1 percent to 8.64 yuan.

“We focus more on transactions; while it’s still too early to say there’s a recovery, some signs of stabilization have emerged in some cities,” David Ng, a Hong Kong-based analyst at Royal Bank of Scotland Plc, said by phone today.

Prices in Shenzhen, in Guangdong province, dropped the most, losing 15.7 percent, the NDRC said. Home prices in February fell by 4.4 percent in Guangzhou and 2.4 percent in Shanghai.

About 40 percent of the factories in Guangdong, which accounts for 12 percent of China’s gross domestic product, extended their Lunar New Year, or Spring Festival, holiday this year because of the global recession, said Stanley Lau, vice chairman of the Federation of Hong Kong Industries last month. This year the holiday ran from Jan. 26 to Feb. 9. The public holiday ended Feb. 1, and factories usually reopen the next day.

“Prices will probably reach a bottom this year, but definitely not in the first half,” said Colliers’ Lee.

China’s gross domestic product grew 6.8 percent in the fourth quarter, and exports dropped 17.5 percent in January, as demand from the U.S. and Europe dried up.

To contact the reporters on this story: Yanping Li in Beijing at yli16@bloomberg.net; Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net

Last Updated: March 10, 2009 00:12 EDT