GROWTH of investment in China’s real estate sector slowed in the first half of 2016, raising expectations that more stimuli may be injected over the rest of the year to boost sales — especially in smaller cities experiencing a persistent glut.

    The slowdown in property investment growth was out of step with China’s overall economic growth which held at a steady 6.7 percent in the second quarter.

    “China’s property-led recovery based on government stimulus has ended, GDP will be slower in the second half because the property sector will not be as hot and new starts won’t be as strong,” said ANZ Greater China Market Economist David Qu, who is based in Shanghai.

    Property investment in January-June rose 6.1 percent from a year earlier, data from the National Bureau of Statistics (NBS) showed Friday, slowing from an increase of 7 percent in January-May.

    For June alone, property investment was up only 3.5 percent from a year ago, according to Reuters calculations, compared with 6.6 percent in May.

    Real estate investment directly affects about 40 other business sectors in China and is considered to be a crucial driver for the economy.

    “A slowdown in the property sector in the second half is bound to happen after a fast pickup in the first half, and the market expectation now is the Chinese Government will ease credit to boost the sector,” said David Hong, head of research at Real Estate Information Corporation (CRIC).

    “But if the loosening measures do not beat expectations, in the end there could be a bigger downside surprise, hurting (investment) confidence in the property sector.”

    New construction starts in June were up 4.9 percent from a year ago, measured by floor area, Reuters calculations showed, slowing from 10.6 percent in May.

    Inventory by floor area last month was 8.6 percent higher than a year earlier, compared to 9.9 percent in the previous month. It posted a fourth consecutive monthly decline.

    (SD-Agencies)