INVESTMENT in Chinese real estate in May recorded its first year-on-year slowdown in growth since December as tightening measures in big cities and a housing glut in smaller centers took their toll.

    Property investment rose 6.6 percent in May from a year earlier, according to Reuters calculations based on data from the National Bureau of Statistics (NBS) yesterday, compared with 9.7 percent in April.

    Property sales by floor area in the first five months grew 33.2 percent, down from 36.5 percent in January-April.

    For the first five months of the year, property investment grew 7 percent, slowing from 7.2 percent in the first four months.

    New construction starts in May were up 10.6 percent from a year ago, measured by floor area, Reuters calculations showed, slowing significantly from 25.9 percent in April.

    Real estate investment directly affects about 40 other business sectors in China and is considered to be a crucial driver for the economy, which saw its slowest growth last year in a quarter of a century.

    A flurry of government stimulus measures have started to turn the sector around, but rapid price gains in some of the biggest cities have fanned fears of a bubble and prompted some local governments to tighten home purchase requirements.

    “While housing construction picked up across all tiers of cities, the extent of recovery has been much smaller compared with the rebound in housing sales. It was mainly due to continued funding constraints faced by developers,” Wei Li, China and Asia economist at the Commonwealth Bank of Australia, said ahead of the data.

    China’s central bank said last week that growth momentum in property investment was likely to be sustained in the short term, but uncertainties remain in the medium term.

    In May alone, the area of property sold grew 24.3 percent, Reuters calculations show, compared with 44.1 percent in April, also the first slowdown since December.

    China’s new-home prices rose further last month, two recent private surveys showed, with values rising at their fastest pace in second-tier cities and reinforcing concerns that some parts of the property market are overheating.

    Yet in many third- and fourth-tier cities huge inventories of unsold homes continue to weigh on prices.

    Growth in inventory floor area last month was 9.9 percent higher than a year earlier, compared to 10.7 percent in April.

    (SD-Agencies)