Real estate sales increased 45.3% to 1 trillion yuan ($146 billion) in the first five months of 2009 from a year earlier and property investment growth rose to 6.8%, the National Bureau of Statistics data shows.
Analysts agree that Premier Wen Jiabao's 4 trillion yuan ($585 billion) stimulus package, record loans and stronger investment are all working and promoting economic growth.
'As developers run down inventory rapidly they will soon start to buy land and increase spending again,' said Frank Gong, chief China economist and strategist at JPMorgan Chase in Hong Kong.
'Property investment, which accounts for 10% of China's GDP and is a trigger for growth in related sectors, will become a strong driving force in China's recovery,' he added.
'Stronger than expected property investment growth means that fixed-asset investment growth in May could surprise on the upside and that investment growth in 2009 may also be stronger than most people expect,' said Sun Mingchun, chief China economist at Nomura Holdings.
Property and development companies are benefiting from the revival in real estate. They include China Vanke, the nation's biggest listed developer, which said that sales in May rose 20% from a year earlier.
As part of the stimulus plan, the government has pledged to build 5.2 million low-rent properties over the next three years and subsidize housing for 7.5 million poor urban families by 2011.
Last month China lowered the amount of funds developers have to put up for property projects to spur construction after cutting transaction costs for property investors last year.
Land sales in Beijing in May exceeded the total amount sold in the first four months of the year, according to the city's land reserve centre. Property sales by value doubled in Beijing, surged 68.5% in eastern Zhejiang province and climbed 61.9% in Shanghai during the five-month period from a year earlier, the statistics bureau confirmed.
Prices are also bottoming out. Property prices dropped 0.6% last month in 70 Chinese cities from a year earlier, the smallest decline in five months. Prices jumped 0.6% month-on-month in May, the bureau added.
