UPDATE 1-China's April property investment resilient but sales growth moderates
* April property investment +12% y/y, unchanged from March – Reuters calculation
* April sales by floor area +1.3% y/y vs +1.8% in March – Reuters calculation
* April construction starts +15.5% y/y vs +18.1% in March -Reuters calculation
BEIJING, May 15 (Reuters) – Property investment in China was resilient in April as developers rushed to boost their land inventories in the wake of looser credit and purchasing rules, but demand for new homes remained weak in a reflection of the broader slowdown in the economy.
Real estate investment is a key driver of growth in the world’s second-largest economy and solidity in the sector could cushion the impact of a vigorous multi-year government crackdown on debt and a sudden flare-up in trade tensions with the United States.
However, some analysts say bubble risks are rising as home prices continue to climb.
The data was one of the few bright spots in a raft of other official economic indicators released on Wednesday, which added to signs that the economy lost momentum at the start of the second quarter. That has heightened fears about the outlook as trade tensions with the United States unexpectedly escalated last week.
China’s real estate investment, which mainly focuses on the residential sector but also includes commercial and office space, rose 12% in April from a year earlier, unchanged from the growth in March, according to Reuters calculation based on data released by National Bureau of Statistics (NBS) on Wednesday.
For the first four months, property investment grew 11.9% on-year, compared with a 10.3% gain in the same period a year earlier.
China’s property market has seen a recent resurgence as some local governments loosen restrictions on home purchases in a bid to boost economic activity, while Beijing’s call for banks to ramp up lending and lower interest rates has also helped boost investor confidence.
But some analysts caution such a rebound might be difficult to sustain as broader economic growth slows and official property market curbs are expected to remain in place in most cities. A national programme to redevelop the country’s shanty towns is also expected to retreat this year.
Property sales by floor area, a major indicator of demand, rose 1.3% in April after growing 1.8% in March, according to Reuters calculations. In the Jan-April period, property sales by area fell 0.3%, narrowing from a 0.9% drop in the first quarter of this year.
Economists say pent-up demand for housing and some local governments relaxing purchase restrictions have been fanning sentiment in a market where fear of missing out is strong.
Funds raised by China’s real estate developers in the first four months grew 8.9% from the same period a year earlier, a notable improvement from a 5.9% increase in the first three months, the NBS data showed.
China’s land market has recovered under looser credit conditions this year and the premiums developers pay for land rebounded sharply in the first quarter of 2019. That contrasts with a slew of failed land auctions in the second half of last year, which followed a prolonged government campaign to rein-in hot property prices.
New construction starts measured by floor area rose 15.5% in April from a year earlier, compared with an 18.1% gain in the preceding month, Reuters calculated based on NBS data. (Reporting by Yawen Chen and Kevin Yao; Additional Reporting by Lusha Zhang; Editing by Sam Holmes & Shri Navaratnam)
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