Within days after the media picked up the narrative that the Chinese “property bubble” is “popping,” a slew of economic data came out from China showing more or less the exact opposite.

From the Wall Street Journal:

After years of housing prices gone wild, China’s property bubble is starting to deflate.

Residential prices are heading downward in some major cities, damping some undesired real-estate speculation but raising the prospect that the Chinese economy may slow more rapidly than anticipated with profound consequences for global growth.

Real estate is a foundation of China’s phenomenal growth record in the past two decades, and its health is crucial to China’s construction, steel and cement sectors. Real estate is also a favored investment of Chinese looking to get better returns than bank deposits pay.

The data they cite comes from April, when there had been a significant drop in floorspace sold and a shorter term drop in floorspace under construction. Flat prices were beginning to drop, as were related commodity prices.

Then May came along and reversed all that. Housing starts grew 22.2% year on year, while property sales increased 18.5%. Land sales and other forms of early real estate investment never slowed down. And this is despite the fact that nothing fundamental has changed in China’s bank lending policies, or other macro-controls that would effect sales.

While there are a few regional issues to watch (sales in Beijing fell 30% in 2010 for instance), there is still significant demand for new properties in China that’s going to maintain the industries that property sales supports. Household wealth is still not significantly overstretched by housing purchases, access to capital is easier than official policies would make it seem, and the government’s social housing push should both bring down prices and maintain demand.

Extrapolating a trend from the last few months data would be dangerous. But currently it looks as though China’s housing stock is still not enough to meet its rapidly expanding wealth.