China’s property sales surged in the first two months of the year despite government measures to cool the market, though growth in real estate investment showed signs of easing, according to official data on Tuesday. Property sales by area rose 25.1 percent year-on-year in January and February. That was above the 22.5 percent annual gain in 2016, which was the strongest annual growth in seven years thanks to a property boom in top-tier cities. It was also a marked surge from December, when property sales by area rose 11.8 percent from a year earlier, according to Reuters’ calculations. After sharp home price rises last year, China’s policymakers have started to worry about overheating in the property market and the risk of a sudden and sharp correction that would knock the economy. Many local governments in cities which have seen the sharpest price rises have rolled out a series of restrictions in the past few months on buying and ownership.
The property readings were part of a raft of data released by China on Tuesday which showed the broader economy remained on a solid growth path early in the year.
Real estate investment grew 8.9 percent in the first two months of 2017 from the same period a year earlier, according to the National Bureau of Statistics.
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That compares with 11.1 percent in December alone, according to Reuters’ calculations, and 6.9 percent in all of 2016.
Real estate investment directly affects about 40 other business sectors in China, and is considered to be a crucial driver for the world’s second-largest economy.
Central bank data last week showed household loans, mostly mortgages, accounted for 25.7 percent of new loans in February, down from 37 percent in January and 50 percent in 2016, adding to signs of cooling in the housing sector.
China’s banking regulator and central bank have told banks to curtail new mortgage lending, state-owned newspaper Economic Information Daily reported on Monday, citing unnamed banking sources.
A Reuters poll in February showed that China’s housing price growth is expected to slow significantly this year due to continuing government curbs and tighter credit conditions, dampening land sales and dragging property investment growth to a median 3 percent in 2017.
China is looking to keep the property market stable this year after prices of new homes soared 12.4 percent last year, the most since 2011.
Analysts believe authorities will continue to tighten restrictions introduced last year to cool the hottest property markets.
But property speculators are betting the government will relent and ease curbs if economic growth begins to falter, as many analysts expect.
New construction starts, a telling figure of property developers’ confidence in the market, were up 10.4 percent in January-February from a year ago, compared with the 8.1 percent annual gain in 2016, the NBS data showed.
But the pace of new starts did moderate slightly from a jump 12.5 percent in December, Reuters calculations showed.
China is aiming for economic growth of around 6.5 percent in 2017, a more modest target than seen in the previous year, Premier Li Keqiang said at the opening of the annual meeting of parliament last week.
That should give policymakers more room to tackle financial risks and prevent asset bubbles.
Li also said that China will continue to implement city-based policy to reduce real estate inventories, mainly in smaller third- and fourth-tier cities where a huge overhang of unsold homes has kept prices far more subdued.
Growth in inventory floor area over the two months period was 4.6 percent lower than one year earlier. The inventory floor area of commercial housing fell 3.2 percent last year.
Housing minister Chen Zhenggao said on the sidelines of the parliament meeting that he was “fully confident” of the outlook for the property market, amid strong economic fundamentals and continuing urbanization.