China May property investment quickens, sales rebound

(C) Reuters. FILE PHOTO: Residential buildings under construction are seen in Jinpu New District in Dalian, Liaoning

By Lusha Zhang and Huizhong Wu

BEIJING (Reuters) – Real estate investment and sales in China both quickened in May, pointing to continuing momentum as the property sector gradually recovers from the impact of the coronavirus outbreak.

The property market is a key driver of growth in the world’s second-largest economy, and was among many segments of the economy hit hard by the coronavirus crisis and tough containment measures.

Real estate investment in May rose 8.1% from a year earlier, up from 7% growth the previous month, according to Reuters calculations based on data from the National Bureau of Statistics on Monday.

For the first five months of the year, property investment fell 0.3% on year, far less than in previous months as the economy begins to slowly emerge from its coronavirus shutdown.

Consumption remains soft, however, amid job losses and concerns about the risk of a second wave of infection.

Property sales by floor area jumped 9.7% in May, the fastest pace since July 2018 and compared with a 2.1% fall in April.

New construction starts measured by floor area rose 2.5% last month, compared with a 1.3% drop in April.

Funds raised by China’s property developers fell 6.1% in the January-May period, compared with a 10.4% % drop for the first four months of 2020.

“May data showed that the impact from the epidemic has gone and China’s property market will continue to heat up going forward,” said Zhang Dawei, a Beijing-based analyst with property agency Centaline.

Separately, China’s average new home prices in 70 major cities rose 0.5% in May from the prior month, matching the pace in April, Reuters calculations showed.

On an annual basis, home prices expanded 4.9% in May, slightly less than April’s 5.1% pace.

Beijing still refrains from using the real estate sector as short-term stimulus, even as the economy struggles to recover from its first contraction in decades in the first quarter.