By Liangping Gao and Ryan Woo

BEIJING (Reuters) – China’s property sales between June and May showed the largest monthly drop this year, based on sales by floor area, and investment in property also slumped, official data showed on Monday, reinforcing the case for more stimulus to bolster a waning economic recovery.

Property sales by floor area declined 28.1% year-on-year, extending a 19.7% fall in May, according to Reuters calculations based on data from the National Bureau of Statistics (NBS).

For June, property investment totaled to 1.2849 trillion yuan, falling 20.6% from a year earlier after a 21.5% drop in May, according to Reuters calculations.

China’s property sector, which accounts for about a quarter of the economy, remains firmly in a downtrend, with new home prices for June stalling after, albeit meagre, gains a month earlier.

The sector has been badly hit since last year as cash-squeezed developers were unable to finish apartment construction, prompting a mortgage boycott by some buyers.

Three years of tough COVID measures and a weak economy have also prompted would-be homebuyers to keep cash in deposits rather than make fresh investments, or pay off existing mortgages, despite the dismantling of virus curbs late last year.

Authorities have provided support measures to revive the embattled sector, including policy interest rate cuts last month, and the central bank’s recent extension of some property loan repayments.

Demand, however, remains sluggish and developers are struggling to finish presold housing projects, many of which were suspended triggering a rare protest from homebuyers threatening to stop mortgage repayments last year.

For January-June, property sales by floor area were down 5.3% year-on-year compared with a 0.9% fall in the first five months.

Property investment fell 7.9% in the first six months, after slumping 7.2% in January-May from the same period a year earlier.

New construction starts measured by floor area fell 24.3% year-on-year, after a 22.6% drop in the first five months.

Funds raised by China’s property developers were down 9.8% on year after a 6.6% slide in January-May.

(Reporting by Liangping Gao, Ella Cao and Ryan Woo; Editing by Kim Coghill & Simon Cameron-Moore)

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