China June property investment growth slows to six-month low

China’s property investment posted its weakest growth in six months in June as developers faced fresh curbs and tighter funding conditions, in a sign one of the economy’s key drivers was losing steam.

Growth in real estate investment, which mainly focuses on residential but also includes commercial and office space, cooled to 8.4 percent in June year-on-year, compared with a 9.8 percent rise in May, according to Reuters calculations based on data from the National Bureau of Statistics (NBS) released on Monday.

Chinese authorities have sought to defuse a housing bubble since 2016, as part of a broader effort to temper financial risks stemming from years of debt build-up.

But policymakers have also been careful not to trigger a sudden crash, wary of ramifications on an already slowing economy.

Growth in the world’s second-largest economy is at risk of losing momentum as the authorities try to tame rapid domestic credit growth at a time when a full-blown trade war with the United States could hurt the economic outlook. China’s economy grew 6.7 percent in the second quarter from a year earlier, data showed on Monday.

China’s major government entities have initiated a fresh round of crackdowns on property irregularities in 30 major cities from July to end-December, as new home prices posted their fastest growth in nearly a year in May.

Property sales by floor area rose 4.5 percent in June from a year ago, down from an 8 percent gain in May, Reuters calculations based on NBS data showed.

China’s housing ministry said on Thursday it would restrict subsidies to cities with hot property markets for new projects to tear down and redevelop shantytowns, a significant source of property demand that had led to a buying frenzy, especially in smaller cities.

China has injected hundreds of billions of dollars of policy loans into redevelopment of urban shanty towns, boosting cash compensation to residents to purchase a new home when their existing home was demolished.

Developers also face tougher a funding environment as China looks to rein in excessive debt financing overseas and a de-risking campaign significantly raises funding costs onshore.

In a sign of fading confidence among property developers, new construction starts measured by floor area rose 15 percent in June from a year earlier, slowing from 20.5 percent in May, Reuters calculations showed.