BEIJING (Reuters) - China's real estate investment growth slowed sharply in the first half, dragging down the broad economy, but property sales swung into positive growth in June for the first time in eight months, boding well for a recovery in the sector which could ease concerns about a hard landing of the world's No 2 economy.
Real estate investment, which affects more than 40 other sectors from cement, steel to furniture, grew 16.6 percent in January-June of 2012, versus an annual rise of 32.9 percent in the same period last year, the National Bureau of Statistics said on Friday.
"The self-initiated property control is an important factor driving down economic growth this year," said Sheng Laiyun, the NBS spokesman, told reporters.
China's economy grew 7.6 percent in the second quarter from a year earlier, the slowest pace in three years, the NBS said.
But Sheng echoed Chinese Premier Wen Jiabao commitment to keeping curbs on the property market, meant to deter speculation.
"We cannot loosen property curbs, which will help the Chinese economy develop in a more sustainable and healthy way despite short-term impact."
That means China would keep restricting the number of homes each family can buy, requiring families buying a second home pay a larger downpayment and higher mortgage rates.
Some economists are worry that the constraints placed on the real estate market will hamper the government's efforts to pull the economy out of its slowdown.
"If the Chinese government doesn't loosen property policies or fulfil its affordable housing construction plan this year, overall economic growth will remain sluggish and this will be a major risk in the second half," ANZ China economist Li-Gang Liu said.
Liu added that earlier stimulus measures have still to yield results. China has cut both interest rates and banks' required reserves twice, fast-tracked investment approvals, and rolled out some incentives to stimulate consumer spending on energy-efficient products.
Real estate data released on Friday also showed newly-started property construction fell 16.3 percent in June from a year earlier, deepening from a fall of 4.6 percent in May.
Meanwhile, total land bought by developers fell 19.9 percent in the first half from a year earlier, more than a fall of 18.7 percent in the first five months, the NBS data showed.
The amount of unsold property space grew to 314 million square meters by the end of June, up from 307 million square meters a month ago. It was three times the 111 million square meters sold in June alone.
Lightening up the official data deluge was the 6.9 percent annual growth in China's property sales revenues in June, snapping a seven-month losing streak.
Besides, annual growth in mortgage loans also turned positive, up 0.8 percent in the first six months, from a fall of 2.9 percent in the first five months.
That confirmed signs of a recovery in the real estate sector already flagged by private sector data and anecdotal reports.
Improving sales and easier credit will enable developers to start replenishing their land bank or quicken rate of construction.
China Vanke, the country's largest developer by sales, said June sales totalled 13.3 billion yuan, flat from a year earlier, but up from May's 10.7 billion yuan.
Domestic media also reported home buyers in some cities queued up overnight before the property project launches, panicking that they might lose out when home prices start rising again.
A Reuters poll on Thursday showed a median forecast of 2.5 percent rise in China's home prices in the second half after a drop of 1.4 percent in the first six months. That overthrew the consensus in an April poll which predicted a home price drop of 15-25 percent in 2012.
The NBS is scheduled to announce June home price data on July 18 and a private survey showed China's home prices across 100 major cities inched up in June after declining in the previous nine months.
Reporting by Langi Chiang and Nick Edwards; Editing by Simon Cameron-Moore