China says property market to continue recovering in H2

But inflation, trade data shows domestic demand remained sluggish in July

China's top economic planner said on Monday that the property market was likely to continue to improve in the second half of this year, a good sign for the struggling economy.

A year-long slump in the housing market has dragged on the world's second-largest economy, which is widely expected to clock its worst performance in a quarter of a century this year.

While home sales and prices have improved in bigger Chinese cities in recent months after a barrage of government support measures, conditions remain weak in smaller cities and a huge overhang of unsold houses is discouraging new investment and construction.

"In the second half, the recovery trend in the property market is likely to be sustained, which will create better situation for consumer prices and support factory-gate prices," the National Development and Reform Commission(NDRC) said on a statement on its website.

Inflation and trade data at the weekend showed domestic demand remained sluggish in July.

Annual consumer inflation remained muted at 1.6% despite a surge in pork prices surging, in line with forecasts and slightly higher than June's 1.4%.

Producer or factory-gate prices hit their lowest point since late 2009, during the aftermath of the global financial crisis, and have been sliding continuously for more than three years.

The price data, along with weak export numbers released at the weekend, have reinforced market expectations that Beijing will have to roll out fresh economic support measures soon if leaders want to meet their 7% growth target for the year.

However, the NDRC said it expected consumer prices to stabilise soon and start to pick up in the second half of 2015, while declines in producer prices were likely to ease partly due to rising agricultural products' prices and stabilising commodities prices.

Chinese leaders are also hoping that increased infrastructure spending will boost activity later this year.