Real estate demand resilient B2

Growth slows slightly but not derailed by curbs

China’s real estate investment growth slowed slightly in the second quarter from the first, suggesting government curbs to rein in the red- hot property market are starting to hit speculators even though underlying demand remains resilient.

As part of a broader effort to temper financial risks stemming from a build- up of debt since the 2009 financial crisis, Chinese authorities have issued a flurry of cooling measures over the past year to defuse a housing bubble. Those steps targeted at speculators in the biggest cities appear to be paying dividends.

Growth in property investment, which mainly focuses on residential but also includes commercial and office space, eased to 8.2 percent in April- June from a year earlier, compared with a 9.1 percent expansion in the first three months of the year, ac- cording to Reuters calculations based on data from the National Bureau of Statistics ( NBS).

The increase in the area of property sold also slowed to 14.1 percent in the second quarter year- on- year, from a 19.5 percent gain in the first quarter, Reuters calculations showed.

However, buyer demand appeared to become more resilient than expected, reinforcing analysts’ views that China’s property market is unlikely to suffer a hard landing as some had worried.

“The property market has cooled a bit but there may not be a big correction, we don’t think there are systemic risks. We are not as worried as when the curbs were put out in March and April,” said ANZ economist Betty Wang.

Indeed, real estate investment growth sped up in June after slowing in May, suggesting investment in the sector remained strong, likely due to more robust demand in smaller centers that are encouraged to reduce inventory and not subject to strict curbs seen in the bigger cities.

It accelerated to 7.9 percent in June from a year earlier, compared with a 7.3 percent expansion in May, according to Reuters calculations based on NBS data.

Policymakers have prioritized stabilizing an overheated property market ahead of the 19th National Congress of the Communist Party of China, reiterating the need to avoid dramatic price volatility.

In spite of government efforts to curb property prices, household loans mostly mortgages rose to 738.4 billion yuan ($ 109 billion) in June from 610.6 billion yuan in May, according to Reuters.