Aug. 10 (Bloomberg) -- China’s property sales surged 60 percent by value in the first seven months, adding to concern that record lending will create a real-estate bubble in the world’s fastest-growing major economy.

Sales accelerated after a 53 percent gain in the first half from a year earlier, the statistics bureau said in a statement on its Web site today. Real estate investment rose 11.6 percent, up from 9.9 percent in the six months to June 30.

Home prices in 70 major cities advanced 1 percent in July from a year earlier, the biggest increase in nine months, the National Development and Reform Commission said today in a separate statement. Premier Wen Jiabao reiterated yesterday that monetary policy will remain unchanged, after climbing asset prices triggered speculation that a tightening could be imminent.

“Policy makers may be getting a bit edgy about asset bubbles developing,” said David Cohen, an economist with Action Economics in Singapore. “They may use administrative measures to cool prices.”

Property stocks, which have gained 142 percent this year to be the best performing group on the Shanghai Composite Index, fell 1.6 percent as of 2:12 p.m. local time on concern loan growth will slow. Poly Real Estate Group Co. fell 2.7 percent.

China Construction Bank Corp. President Zhang Jianguo said last week that the nation’s second-biggest bank will cut new lending by about 70 percent in the second half to avert a surge in bad debt.

$1 Trillion of Loans

“There’s concern that while the macro-economic policy will stay the course, the real-estate industry won’t escape some policy fine-tuning,” said Zhang Chifei, a Nanjing-based real- estate analyst at Huatai Securities Co.

China’s economic growth accelerated in the second quarter and the Shanghai Composite Index has climbed almost 80 percent this year, powered by $1.1 trillion of lending in the first six months. Home prices in the 70 cities began to rise in June after declining for the previous six months.

Property sales by area climbed 37 percent in the first seven months from a year earlier, the statistics bureau said.

“The overall increase that we’re seeing in property prices is still manageable, the government would be more concerned about the stock market,” said Sherman Chan, an economist at Moody’s Economy.com in Sydney. “Higher confidence and more liquidity” are causing price gains, she added.

No Alternatives

Central bank and finance ministry officials said Aug. 7 that they will scrutinize gains in stock prices without capping new lending. The Financial Times reported the same day that the central bank had told the largest state-controlled lenders to slow growth in new loans, citing unidentified people familiar with the matter.

Property prices are being boosted by a lack of investment alternatives in China, Kenneth Tsang, Asia Pacific head of research at LaSalle Investment Management, said Aug. 6.

“It’s property or the stock market,” Tsang said. “Some of the government officials lately are increasingly concerned about the situation in China and there may be a bubble,”

In July, new home prices rose in 43 cities and fell in 26 from a year earlier, the NDRC said. The largest increase was a 6.4 percent gain in the eastern city of Ningbo. Month-on-month, 63 cities posted increases in new home prices, with three reporting declines.

Across the 70 cities, home prices climbed 0.9 percent from June, the fifth straight monthly again.

To contact the Bloomberg News staff on this story: Paul Panckhurst in Beijing at ppanckhurst@bloomberg.net

Last Updated: August 10, 2009 02:39 EDT