China's May property investment growth dips to slowest since 2009

HONG KONG (Reuters) - China's real estate investment growth continued on its downward track in the first five months of 2015, to reach its slowest rate since May 2009, but government stimulus policies appeared to all but end the decline in floor area sold.

Property investment growth slowed to 5.1 percent in January to May from a year earlier, the National Bureau of Statistics (NBS) reported on Thursday, easing from 6 percent in the first four months.

The floor area of property sold dropped just 0.2 percent during the period, narrowing from a 4.8 percent decline in January to April.

In May alone, home sales measured by floor area rose 16.4 percent from a year ago, continuing on an uptrend that was first seen since November 2013. The figure was compared to a 7.7 percent rise in April.

Analysts said the robust momentum in the housing market should last - at least in the short term.

"With only one month to the mid-year mark, most developers will likely accelerate new launches to try to secure a better sales target hit-rate, which we believe should continue to drive sales momentum in the physical housing market," said Barclays analyst Alvin Wong.

Rating agency Moody's changed its outlook on the China property sector to stable from negative last week, reflecting the effects of supportive monetary and regulatory policies, and forecast China property sales would grow 0 to 5 percent by value in the next 12 months.

China's central bank cut interest rates for the third time in six months in May to lower companies' borrowing costs and re-energize a sputtering economy.

An immediate beneficiary might have been real estate investment, which directly affects about 40 other business sectors in China, and is considered to be a crucial driver of economic activity.

The stock exchange CSI300 real estate sub-index <.CSI300REI> fell around 1.3 percent after the data was published, versus a 0.5 percent fall in the CSI300 index <.CSI300>.

Prices of new homes in 288 cities edged up 0.05 percent in May from April, the first rise in 14 months, property services provider Real Estate Information Corporation (CRIC) said early this month. Prices in first-tier cities improved by as much as 2.2 percent.

China is due to report May home prices on June 18.

(Reporting by Clare Jim in HONG KONG and Judy Hua in BEIJING; Editing by Eric Meijer)