China's August property investment growth hits 16-month high

FILE PHOTO: Lights are seen reflected on a window as a man works on renovating an office building near residential buildings in Beijing, China August 12, 2019. REUTERS/Florence Lo

BEIJING (Reuters) - China’s real estate investment rose at the fastest pace in 16 months in August, supported by robust sales, as the property market helped underpin the post-COVID economic recovery.

Real estate investment in August rose 11.8% from a year earlier, quickening slightly from 11.7% seen in July, according to Reuters calculations based on data from the National Bureau of Statistics on Tuesday.

For January-August period, property investment grew 4.6% on an annual basis, faster than a 3.4% uptick in January-July.

China’s property market was among the first to recover after the economy reopened this year, thanks to cheaper credit and a relaxation of urban residential curbs, with some analysts warning of a potential bubble in a handful of big cities.

But top government officials are keen to keep property prices in check, reiterating its overarching policy of “houses are for living, not speculating” and keeping most of its real estate curbs in cities across China in place.

Evergrande 3333.HK, China's second-biggest property developer, stepped up price discounting this year to clear a growing pile of unsold homes. Property developers have faced sluggish demand in smaller cities as the pandemic hit people's incomes.

Property sales by floor area rose 13.7% from a year earlier in August, faster than July’s expansion of 9.5%, Reuters calculations showed.

However, growth in new construction starts measured by floor area eased to 2.4% in August, from the 11.3% increase in July.

Funds raised by China’s property developers grew 3.0%, compared with a 0.8% growth for the first seven months of 2020.

Reporting By Liangping Gao, Stella Qiu and Gabriel Crossley; Editing by Sam Holmes