Record land prices defy Beijing’s cooling efforts
A shortage of new plots in major cities has developers in a bidding war
New price records have emerged from land deals in cities from Wuhan to Guangzhou despite Beijing’s pledges to tame land inflation, reflecting the weakness of a centralised campaign to cool the housing market.
The mainland’s land market, dominated by municipal governments, plays a central role in the country’s urbanisation.
Local governments rely on land sales for revenues, developers are eager to launch projects in big cities, and both the banking system and its shadow counterpart offer credit to grease the deals.
Tightening measures introduced in some 20 cities at the end of September, mainly banning some people from buying homes or getting bank credit, have slowed home price growth a bit. But a shortage of new land, especially in crowded cities, has forced developers to chase after land parcels with high bids.
Meanwhile, Beijing has increasingly been turning to state intervention and even moral persuasion to manage the world’s second-biggest economy. But analysts say that it will be difficult for the government to overcome market fundamentals.