BEIJING -- China's property investments continued to grow at a rapid pace in the first six months of this year despite tough policies designed to cool the market by curbing speculative real estate purchases.

However, some of the growth can be pegged to the welcome construction of economically affordable housing in a market that has been reeling from sky high prices, observers said.

"We believe that large-scale construction of low-cost housing will be a major driver for the country's economic growth," Jing Ulrich, JPMorgan Chase & Co's chairman of global markets for China, said in a research note.

Investments in the country's property sector increased 32.9 percent year-on-year to reach 2.63 trillion yuan ($400 billion) -- of which 1.86 trillion yuan went into residential housing. That's an increase of 36.1 percent from the same period last year, the National Bureau of Statistics (NBS) announced on Wednesday.

China's fixed asset investments increased 25.6 percent year-on-year to 12.46 trillion yuan in the first half of 2011, indicating that one of the country's three economic engines remains on track. In June, fixed asset investments fell 1.04 percent from May, the NBS reported.

The central government reported earlier this month that 10 million units of low-cost housing will be built this year. This amount, which is the largest on record, is expected to address the difficulty an estimated 30 million people face in finding affordable homes.

The National Development and Reform Commission has said financial institutions and enterprises can introduce bonds to finance the development of low-cost housing.

With the supply of low-cost housing picking up and tightening measures in the traditional residential sector, most experts said a property price drop might happen in the third quarter.