CHINA’S property investment and sales growth both eased to a three-month low in October, suggesting a critical pillar of the economy is softening, but new construction surged in a sign developers are rushing to promote sales.

Property investment is a key growth driver for China. A robust housing market has helped counter a slowdown in the manufacturing sector as a 16-month trade spat with the United States slashed profits and investments for factories.

Real estate investment in October grew 8.8 percent from a year earlier, the slowest pace since July, down from September’s 10.5 percent expansion, according to calculations based on National Bureau of Statistics (NBS) data Thursday.

For the January-October period, property investment rose 10.3 percent from a year earlier, versus a 9.7 percent gain in the same period last year and 10.5 percent in the first nine months.

The downbeat readings aligned with worse-than-expected factory activity contraction and steepest producer inflation in over three years reported last month.

“Not only were last month’s data weak, but further weakness lurks ahead. Real estate is primed for a further moderation as financing to the sector is being squeezed by a regulatory crackdown,” Martin Lynge Rasmussen, China economist at Capital Economics, said in a note.

Property sales by floor area, a key barometer of demand, rose 1.9 percent year on year in October, also the slowest since July and lower than September’s 2.9 percent growth, calculations showed.

That compared with a 3.1 percent sales drop seen in October last year.

For the 10-month period, sales increased 0.1 percent on an annual basis, recovering marginally from a 0.1 percent drop in the first nine months.

The weakness in October, which is traditionally a high season for new home sales, was in line with sluggish transactions in smaller cities.

October’s property transactions fell 8 percent year on year in 25 major tier-2 and tier-3 cities, data from private research firm CRIC showed. (SD-Agencies)