Real estate investment remained high in the first half of this year. The total real estate investment nationwide from January to June was 6.16 trillion yuan ($892.89 billion), up 10.9 percent year on year. In June alone, real estate investment reached 1.55 trillion yuan, an increase of 31.01 percent from the previous month, indicating high market investment enthusiasm.

The reason for this high enthusiasm was reflected in property developers expediting real estate projects, which was aimed at accelerating payment collection. Along with the steadily increasing newly started real estate construction, investment in the realty sector grew rapidly. In June, newly started real estate construction area was 257 million square meters, up 21.17 percent month-on-month.

But most regions, including eastern, central and western China, witnessed a decline in investment since the peak of April, suggesting the high enthusiasm for real estate investment is concentrated mainly in newly constructed projects, which can be hardly maintained in the future.

In June, the average housing price in the country's top 100 cities was 14,891 yuan per square meter, an increase of 3.98 percent year-on-year. But the rate of increase was 1.69 percentage points lower than that in June 2018, indicating a declining growth rate of housing prices in big and medium-sized cities.

In the first half, the land purchase area and the average land transaction price both declined on a large scale. While the land purchase area declined 27.5 percent year-on-year, the total amount of money involved in transactions dropped 27.6 percent year-on-year. From January to June, the average land transaction price nationwide was 4,743 yuan per square meter, 14.16 percent lower than the average price of 5,525 yuan per square meter last year.

The land transaction price declined for first time since 2012 in the first half of 2019. Since land price is main factor that determines commercial housing prices, a decline in land price will be reflected in the commercial housing market one to two years later.

Besides, housing transaction was sluggish in the first half, and real estate sales showed a downward trend. From January to June, 757.86 million square meters of commercial housing were sold, down 1.8 percent year-on-year. Although real estate sales increased 5.6 percent in the first half, the growth rate dropped 0.5 percentage point year-on-year. All these declines indicate the real estate market is gradually cooling down.

The recovery in March and April didn't boost the entire real estate market because of the diversified real estate control policy in different cities, stable growth of bank credit and increasing supply of commercial housing. After a short-term market rebound, real estate market growth slowed again.

In the latter half year of this year, maintaining the stability of the real estate market should be the top priority. And since the central government's real estate control policy has not changed, local governments should be able to stabilize land and housing prices, and help maintain market expectations.

The recent meeting of the Political Bureau of the Communist Party of China Central Committee reiterated that investment in the real estate market should not be used as a short-term stimulus to boost the economy. So in the second half, control policy in hotspot cities would continue to be strict－could be even tightened. But the control policy in some second-and third-tier cities and a majority of fourth-tier cities may be gradually loosened due to downward market pressure, slowing real estate transaction and the resulting inventory risks.

The real estate market is expected to remain relatively stable for the rest of the year, although commercial housing sales could further decline, growth of housing prices could continue slowing down, and the growth rate of real estate investment could decline to varying degrees in different cities. The housing markets in four first-tier cities have been recovering slowly due to the strict real estate control policy, while remaining relatively stable in second-and third-tier cities.

As the monetary settlement policy for shanty town renovation is gradually withdrawn from third-and fourth-tier cities, the real estate markets in these cities may face some downward pressure. Therefore, this year's key risk prevention areas for the real estate market are the third-and fourth-tier cities, which face the risk of a rapid decline in housing prices in the second half.

The author is a researcher at the Institute for Urban and Environmental Studies, Chinese Academy of Social Sciences. The views don't necessarily reflect those of China Daily.