BEIJING (Reuters) - Growth in China real estate investment slowed further in the first 10 months of 2014, but property sales showed some signs of improvement, indicating Beijing’s efforts to boost the ailing sector may be starting to have an effect.
Property investment, which affects more than 40 other sectors from cement to furniture, grew at its slowest pace in over five years between January to October, rising 12.4 percent from the same period a year earlier, the National Bureau of Statistics(NBS) said on Thursday.
That compared with a rise of 12.5 percent in the first nine months and was the slowest pace since July 2009.
“Slowing property investment growth has continued to drag on China’s broad economy,” said Du Zhengzheng, an economist at China Development Bank Securities in Beijing.
“We expect the trend will continue in coming months even though sales picked up.”
Property sales fell 1.6 percent in October in terms of floor space, easing substantially from September’s 10.3 percent drop.
That came after Beijing announced steps in September to support the sluggish property market, including lower mortgage rates and down payments for some home buyers
“Those are early signs that there may not be a collapse of the property market and the recent measures may have stabilized the momentum of property investment,” said Shuang Ding, an economist at Citi in Hong Kong.
The NBS data also showed mortgage loans to home buyers dropped 4.3 percent in the first 10 months of 2014, easing from the drop of 4.9 percent in January-September, as banks quickened their mortgage approvals and started to provide preferential rates to some home buyers.
Still, analysts doubted whether the government moves in September would stem the weakness in the property market as a glut of unsold homes hangs over the market. Many expect real estate will remain under pressure well into 2015.
As the sector accounts for more than 15 percent of China’s annual economic output, the prolonged cooling of the housing market poses the biggest risk to the world’s second-largest economy, even as Beijing tries to stimulate overall growth, economists said.
A private survey showed home prices in China dropped for a sixth consecutive month in October, pointing to a persistent property downturn.
Editing by Kim Coghill