China property investment keeps up a solid pace in April

SHANGHAI: China's real estate investment in April kept pace with the previous month, as developers continued to start projects in response to surging home sales, which are giving a much-needed boost to the slowing economy.

Property investment rose 9.7 percent in April from a year earlier, according to Reuters calculations based on data from the National Bureau of Statistics (NBS) on Saturday, the same rate as in March.

The bureau said new construction starts in the first four months were up 21.4 percent from a year ago, measured by floor space, accelerating from 19.2 percent in the first three months.

Real estate investment is a major driver of the economy which affects more than 40 other sectors from cement to furniture. A flurry of government stimulus measures have started to turn the ailing sector around over the past year, though huge inventories of unsold homes continue to weigh on prices in smaller cities.

"New starts are increasing because of the good sales," said Franco Leung, a vice president at Moody's. "Inventory may go up in the first- and second-tier cities (due to more new starts) but it will still be at a low level."

The area of property sold in the January to April period grew 36.5 percent, compared with 33.1 percent in January-March and the fastest since April 2013.

Moody's said it expected growth in China's property sales would moderate to the single digits over the next 12 months due to a high base and limited benefits from further stimulus measures.

Some local governments in provinces facing large housing gluts, such as Heilongjiang in northernmost China, are restricting land sales and offering subsidies to rural folk looking to buy homes in urban areas.

On the other hand, some of China's biggest cities such as Shenzhen and Shanghai have tightened downpayment requirements for second homes and raised the eligibility bar for non-residents in March.

China's home prices continued to grow from a year earlier at an accelerating pace in April despite the tighter measures introduced in big cities, two private surveys showed.

Inventory floor area in April was 10.7 percent higher than a year earlier, compared to 13.1 percent in March.