UPDATE 1-China's Sept property investment slows, sales fall

(Adds details, background)

* Sept property investment +8.9 pct y/y vs +9.2 pct in August - Reuters calculation

* Sept sales by floor area -3.6 pct y/y vs +2.4 pct in Aug - Reuters calculation

* Sept new construction starts +20.3 pct y/y vs +26.6 pct in Aug - Reuters calculations

* Developers' funding conditions improve

BEIJING, Oct 19 (Reuters) - Growth in China's real estate investment eased in September and home sales fell for the first time since April, pointing to growing strains in a major driver of economic activity.

A cooling market could sharply increase the downside risks to the world's second-largest economy, which faces broader headwinds including an intensifying trade war with the United States.

Growth in real estate investment, which mainly focuses on residential but also includes commercial and office space, rose 8.9 percent in September from a year earlier, compared with a 9.2 percent rise in August, Reuters calculated from National Bureau of Statistics (NBS) data out on Friday.

Real estate has been one of the few bright spots in China's investment landscape, partly due to robust sales in smaller cities where a government clampdown on speculation has been not as aggressive as it is in larger cities.

But the market has struggled over the period dubbed "Golden September and Silver October", traditionally a high season for new home sales.

Property sales by floor area fell 3.6 percent in September from a year earlier, compared with a 2.4 percent gain in August, according to Reuters calculations, the first decline since April. In year-to-date terms, property sales rose 2.9 percent in the first three quarters.

There are already some signs of increasing caution among developers following a surge in failed land auctions due to tight liquidity and thinning margins.

New construction starts measured by floor area, an indicator of developers' expansion appetite, rose 20.3 percent in September from a year earlier, compared with a 26.6 percent gain in August, Reuters calculations showed.

That's against the backdrop of seemingly looser funding conditions for China's real estate developers, who raised 12.2 trillion yuan ($1.76 trillion) in the first nine months, up 7.8 percent from the same period a year earlier, the NBS said.

The growth rate compared with a 6.9 percent increase in January-August period.

China's housing ministry is considering putting an end to the pre-sale system that developers use to secure capital quickly, in an effort to crack down on financial risks in the property sector.

China's home prices held up well in August, defying property curbs. But analysts expect additional regulatory tightening and slowing economic growth will soon take the wind out of the property market's sails. ($1 = 6.9385 Chinese yuan) (Reporting by Yawen Chen and Kevin Yao; Additional Reporting by Lusha Zhang; Editing by Sam Holmes)