What’s new: China’s real estate investment shrank at a faster pace in May, underscoring the industry’s struggle as a market recovery loses stream.
Investment in the property sector declined 7.2% in the first five months, widening a 6.2% drop recorded in the January-to-April period, according to the National Bureau of Statistics (NBS). Investment in residential projects plunged 6.4% during the first five months, worse than the 3.9% drop in the first four months, data showed.
The pace of investment decline has accelerated for three consecutive months since March, according to the NBS.
From January to May, new construction fell 22.6% to 397 million square meters. That compared with a 21.2% decrease during the first four months, NBS data showed.
“The real estate market generally remained stable in May, but investment and construction remained sluggish due to various factors,” Fu Linghui, spokesman of the NBS, said Thursday. “As the property market recovers slowly, developers show weak willingness to develop new projects.”
The context: China’s housing market recovery has been losing momentum since the second quarter after a brief rebound in the first.
Property sales during the first five months totaled 464 million square meters, down 0.9% from a year ago, NBS data showed Thursday. New-home prices in 70 cities, excluding state-subsidized housing, increased 0.1% in May, the slowest pace in four months.
China’s real estate sector is key to the economic growth outlook this year as it accounts for about 20% of gross domestic product after including related industries. Analysts are calling for more supportive policies to prop up the sector, such as further easing of requirements on home purchases and mortgages in large cities.
Weighed down by weak property investment, China’s broader fixed-asset investment increased 4% year-on-year during the January-to-May period, down from 4.7% growth in the first four months, NBS data showed.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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