PROPERTY investment in China slowed to its weakest pace this year in a sign that the housing market’s resilience may be waning as the government toughens its crackdown on speculative investments and holds back on new stimulus.

Property investment, which mostly focuses on the residential sector but also includes commercial and office space, is a key driver of growth in the world’s second largest economy.

Real estate has also been one of the few bright spots in the economy, which is dealing with the effects of a trade spat with the United States.

However, China’s real estate has become increasingly polarized in recent months, with some cities showing signs of overheating and others rapidly cooling.

The government has dashed hopes it would ease its bubble-curbing measures to boost the faltering economy, saying in a high-profile work meeting in July it will not use the property market as a form of short-term stimulus.

At the same time, there are concerns further cooling could lead to painful repercussions for local government such as shrinking revenues. A slowdown has been felt deeply in many provincial cities after the real estate market hit a downturn in late 2018.

Property investment in July rose 8.5 percent year on year, easing from June’s 10.1 percent gain and was the slowest since December’s 8.2 percent, media calculation based on National Bureau of Statistics (NBS) data showed yesterday.

It still grew 10.6 percent from the prior year for the January-July period, compared with a 10.2 percent increase in the same period last year and 10.9 percent in the first six months.

Property sales by floor area — a key gauge of demand — grew 1.2 percent in July from a year earlier, recovering from a 2.2 percent drop in June, according to media calculations.

For the first seven months, however, sales still fell 1.3 percent following a 1.8 percent decline in the January-June period.

Funds raised by China’s housing developers grew 7 percent year on year in the January-July period, lower than a 7.2 percent increase in the first six months, official data showed and pointing to growing financial strains for residential developers as China tightened its grip on money flowing to the property market.

The government has made it harder for developers to raise new capital. Earlier this month, authorities launched a nationwide bank inspection to crack down on loans illegally directed to property market.

Access to foreign investment through the offshore bond market has also been further restricted, while major trust companies involved in real estate investment suspended new fundraising for home developers following window guidance from the regulator.

New construction starts measured by floor area slowed, rising 6.6 percent year on year in July, versus a 8.9 percent gain in the prior month, according to media calculations. For the January-July period, new construction starts rose 9.5 percent versus a 10.1 percent increase in the January-June period.(SD-Agencies)