A man walks past a wall at a construction site for a new residential compound at the Binhai new district in Tianjin, China, October 18, 2015. With prices of new homes rising by about 10 percent since the August chemical blast to meet an increase in demand, finding new homes outside the disaster area for most of those affected is a costly - and frustrating - process. Picture taken October 18, 2015. REUTERS/Kim Kyung-Hoon
BEIJING: September's investment in Chinese real estate showed its strongest growth since May as booming construction, sales and prices contributed handsomely to third-quarter economic expansion of 6.7% - offsetting stubbornly weak exports.
Property investment rose 7.8% in September from a year earlier, compared with 6.2% in August, according to Reuters calculations based on data issued by the National Bureau of Statistics (NBS) on Wednesday.
But real estate developers may have become more cautious of taking on new developments, fearing a fall in sales momentum if the government imposes more tightening measures to prevent a property bubble, analysts say.
New construction starts fell 19.4% in September month, suggesting sentiment among builders may have already started to cool.
"Today (Wednesday)'s data showed developers are relatively cautious on new projects, because land has become rather expensive now, and such a strong sales momentum might not be sustainable moving forward," said Wang Tao, chief China economist at UBS.
More than 20 cities have adopted restrictive measures, including higher mortgage downpayments and an immediate ban on second-home purchases, to prevent speculative buying that could further fuel price bubbles.
Most of these measures, however, were implemented during China's national holidays over the first week of October, and were yet to be reflected in Wednesday's NBS data.
Wang said the sharp decline in new construction starts in September was also due to high base number from the previous year, noting that the number is highly volatile.
"The developers might have quickened the pace for investment, to finish the existing projects since sales performance was so great," Wang said.
For the first nine months of the year, property investment grew 5.8%, accelerating from 5.4% in the first eight months.
In September alone, the area of property sold grew a vibrant 34%, Reuters calculations show, compared with 19.8% in August.
Property sales by floor area in the first nine months grew 26.9%, up from 25.5% growth in January-August.
But overheating in some parts of the property market over recent months has become a serious concern for policymakers.
Housing prices in tier-1 and some tier-2 Chinese cities soared 27% on-year in July and 28% in August marking the second bout of housing fever this year, according to a UBS report.
Some analysts noted that the sharp price rises reflected a rush to buy in anticipation of new ownership restrictions being introduced.
Yet with policies set to curb prices and demand being withdrawn earlier, analysts expect sales momentum to gradually decelerate, while relatively high investment growth could be expected to last until year-end.
"I think property investment will be able to support the economy in the next two months, but after that the supportive effects will be smaller," Wang said, adding that the government would increasingly rely on infrastructure investment next year.
Sheng Laiyun, a spokesman for the National Bureau of Statistics, said the property sector contributed 8% to China's GDP growth in the first nine months of 2016, which came in as expected at 6.7%.
He said recent property market tightening measures would not have a "very big impact" on economic growth.
Although growth in inventories has been on a downward trend as speculative buying spilled over from bigger cities to lesser-known, lower-level centres, huge inventories of unsold homes continue to weigh on prices in many smaller centres.
Growth in inventory floor area last month was 4.7% higher than a year earlier, compared with 6.9% in August. - Reuters
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