Mainland land prices fall as Beijing sets limits
Land prices on the mainland declined 13 per cent in 120 cities in the first quarter, signalling Beijing's many efforts to cool the property markets may be taking effect.
Data from the China Real Estate Index System (CREIS) shows the average land price was 1,609 yuan (HK$1,913) per square metre for the three months to March. The number of development sites sold through government auctions declined 21 per cent to 4,372 in the 120 cities.
'Developers have become cautious in their land acquisitions as home sales declined after the central government's imposition of limits on the number of purchase homes,' said Jiang Yunfeng, a CREIS director.
Last week, the Shenzhen municipal government was forced to withdraw a prime commercial site from auction due to a lacklustre response from potential buyers. The site was offered for auction at an opening bid of 650 million yuan or 24,000 yuan per square metre. It attracted nine developers to the auction but none submitted bids for the site. In Guangzhou, four development sites, with a total area of 210,000 square metres, were sold for opening bids.
Jiang expects property prices will be under downward pressure amid a string of austerity measures to curb demand and speculation. 'Developers are likely to adopt a lower-price strategy to market their new projects in order to enhance their cash flow,' said Jiang. 'They will be more selective in land replenishment amid market doldrums.'
According to 35 cities monitored by CREIS, 16 recorded home sales volume that plunged more than 40 per cent from April 4 to 10 compared with the previous week. Dalian recorded residential transactions fell 89 per cent during the period, while Chongqing declined 58 per cent. Beijing's sales volume lost 40 per cent.
In February, Beijing required non-local residents to prove they had paid taxes in the city for five years before they could buy a home there. Non-local residents currently account for about 60 per cent of the capital's transactions.