Chinese property sector accelerates in March

BEIJING: China's property sector continued to gather strength in March, and strong sales and market sentiment suggest the upswing enjoys solid momentum.

Investment in real estate rose 35.1% in 1Q from a year earlier, faster than the 31.1% growth rate of the first two months, the National Bureau of Statistics said on Wednesday (April 14).

In March alone, property investment soared 39% from the same month last year, according to economists' calculations.

Newly started floor space in the first quarter rose 60.8%. Xing Ziqiang, an economist at China International Capital Corp, a Beijing investment bank, said the increase appeared to be the largest on record.

He said relatively strong sales and low inventories combined to kick-start new construction last month.

"What's more, the government has called for an increase in the supply of affordable houses, which also encouraged the start of new property projects," Xing said.

Sales of property in the first three months rose 35.8% from a year earlier, slightly below the 38.2% increase in the first two months.

Property inflation in 70 cities quickened to 11.7% in the year to March from February's 10.7% reading. Many analysts say the way the index is compiled seriously understates the headline figure. Prices in parts of Beijing and other major cities have risen much more sharply.

Still, it was the tenth consecutive year-on-year rise after seven months of declines, adding to worries that a property bubble is forming.

Xing said the sector would maintain broad-based strength in the coming months before supply and demand come into better balance in 2H2010.

The bureau's real estate climate index moved up to 105.89 in March from 105.47 in February. It was the sixth consecutive month that it has been above the boom-bust line of 100, the NBS said.

Beijing has repeatedly pledged to curb excessively fast real estate price rises in some cities by increasing the supply of affordable houses while clamping down on speculative purchases.

Liu Mingkang, head of the China Banking Regulatory Commission, sounded a stern warning to banks on April 11 to beware of the risks of lending to property developers. -- Reuters