REAL estate investment in China over the first two months of 2018 grew at it strongest pace since 2015, with developers rushing to roll out new projects as a government crackdown on risky financing triggered worries about future financing.

But property sales growth softened from a year ago, data from the National Bureau of Statistics (NBS) showed yesterday, indicating efforts to stem speculation in the sector were paying off.

Real estate, which directly affects 40 other business sectors in China, is seen as one of the biggest risks for the country this year. A sharp softening of prices and investment would weigh on broader economic growth and consumer confidence, while a rebound in housing prices could trigger more government cooling measures, again threatening to curb growth.

Property investment grew 9.9 percent in the January-February period from the same period a year ago, data showed yesterday, the fastest growth for the period since 2015. It was also quicker than last year’s 7 percent — which marked the best annual growth since 2014.

The number suggests “developers are speeding up development to launch more pre-sale projects,” an analyst with Shanghai-based E-house China R&D Institute said.

“There might be growing liquidity pressure for property developers to face,” Yan Yuejin said.

Some industry experts say signs of tighter liquidity have already emerged.

“Usually banks are more generous at the start of the year, but this year it feels different,” said Grant Ji, executive director of capital markets at CBRE.

Developers’ financing cost has edged up at least 2 to 3 percentage points compared to last year, he added.

But the overall property sales growth, while softer, is not too pessimistic as smaller tier-3 and tier-4 cities are selling very well, he said.

In a fierce war to boost market share, Chinese developers are planning a larger budget than last year to expand their land reserves and enter smaller cities as supply in bigger metropolises gets more difficult to find.

Some of China’s provincial capitals have moved to support first-time buyers and upgraders by relaxing curbs, in a bid to lure talent and keep apartment sales booming.

China’s property sales by floor area rose by 4.1 percent in the January-February period from a year ago, easing slightly from a 6.1-percent gain in December, according to media calculations.

New construction starts measured by floor area were up 2.9 percent, after rising 8.6 percent in December, NBS data showed.

Some analysts say the figures are still more optimistic than expected, pointing to firm sales performance throughout the year as market expectations for small price appreciations are unlikely to be shaken.(SD-Agencies)