China September property investment growth slows to six-year low

Chinese home buyers visiting a housing fair in Yichang, in China's Hubei province.
Chinese home buyers visiting a housing fair in Yichang, in China's Hubei province.PHOTO: AFP

BEIJING (REUTERS) - Growth in China's real estate investment over the first nine months of the year cooled to its slowest rate since the global financial crisis, although sales improved, underlining a mixed recovery in one of the most critical sectors of the economy.

Property investment, a main driver of the economy, grew 2.6 per cent in the first nine months of 2015 from a year earlier, marking the slowest rate since the January to February period of 2009, data from the National Bureau of Statistics(NBS) showed on Monday (Oct 19).

"The fact that real estate investment is weak will hinder Q4 economic recovery," said Oliver Barron, a China policy researcher at NSBO in Beijing.

While home sales and prices have improved in bigger Chinese cities over recent months after a barrage of government support measures, conditions remain weak in smaller cities and a huge overhang of unsold homes is discouraging new investment and construction.

New construction fell 12.6 per cent during the January to September period from a year earlier though it slowed from a 16.8 percent annual drop in the first eight months, the NBS data showed.

Reflecting the sharp drop in housing starts, sales of earth excavating machines in China fell 35 per cent in September from a year earlier, the China Construction Machinery Association (CCMA) said.

The property malaise has weighed on the world's second-largest economy, which is expected to post its slowest growth in a 25 years in this year.

Still, the recent rebound in home sales could suggest the housing market is at least bottoming out.

The floor area of property sold grew 7.5 per cent during the January-September period, up from a 7.2 per cent increase in January to August, according to the NBS data.

Regulators cut downpayment requirements again late last month for first-time home buyers as they look to reduce the property market's drag on the broader economy.

China's average new home prices rose 0.3 per cent in August from July, the fourth straight month of gains, though they were still down 2.3 per cent from a year earlier, according to official data out last month.