Land prices fall 14pc amid rise in unsold new homes
Mainland residential land prices fell 14 per cent last month from April as developers grew cautious about acquiring sites given their growing inventories of unsold new homes and the tight credit environment.
The average price of land for homebuilding declined to 1,101 yuan (HK$1,345) per square metre last month, according to China Index Academy, a real estate research institute that monitors 300 cities.
Last month, 542 residential sites comprising a total of 22.97 million square metres were sold, down 33 per cent from a year ago.
'Fewer residential sites were sold last month partly due to higher inventory levels in the new-home market,' the academy said.
2,154 plots of land - inclusive of commercial and industrial land - were sold last month, down 5 per cent from April.
Real estate consultancy DTZ said inventories of unsold new homes continued to rise despite a rebound in home sales last month.
For instance, in 10 cities -including Wuhan, Shenzhen, Xiamen and Shenyang - the stock of unsold new homes increased. Based on the prevailing sales rate, it would take 10.8 to 17 months for the current stock of new homes to be sold, DTZ said.
Developers have consequently been forced to cut prices by 15 to 25 per cent to boost sales, property agents say.
However, new-home sales rose 6 per cent by volume from May 28 to June 3 compared with the previous week, to 3.2 million square metres, in the 13 cities it monitors, according to Standard Chartered's latest report. That's the strongest weekly sales since January last year.
The performance is also 12 per cent above the weekly sales average last month, the strongest month in terms of sales this year, according to the bank. 'Sales momentum is improving steadily and has not subsided after the Labour Day holiday in early May,' said Standard Chartered.
The academy says 3,140 sites were released for sale last month, up 6 per cent from April. Of that number, 919 were released for auction, an increase of 19 per cent from April.