The mainland's Ministry of Land and Resources has called a halt to the supply of land for building villas in an effort to cool down the property market. The ministry issued the order last week after the People's Bank of China, the country's central bank, warned that commercial banks should tighten their lending policies on property, according to China Daily Business Weekly. The newspaper quoted a source in the ministry's Land Utilisation Department as saying it was improper for cities such as Beijing to use 'insufficient and valuable' land to develop luxury accommodation for a very small group of rich people. Moreover, demand might not be as great as expected, and an excessive supply of this category of housing was not merely a waste of valuable land but was likely to cause a bubble in the local property market, the newspaper said. The Institute of Economics under the State Development and Planning Commission, the government's main policy-making body, claimed in January the property market had been experiencing bubbles. Developers have long refused to admit over-fast expansion in the market. However, property consultants have welcomed tightening measures adopted by the ministry and the central bank. Shiow Jengguo, director of housing services at Debenham Tie Leung International Property Advisers' Beijing office, told China Daily Business Weekly that the halt to the supply of land for villas would increase the price of existing developments. This could fuel the expansion of leading developers, many of whom had large amounts of land in reserve, he said. Li Xueyan, chief analyst with Beijing-based BA Consulting, said the ministry's new policy would not substantially influence the villa market, as a great deal of land to be developed into villa projects had already been sold to developers. He predicted that demand for villas, including suburban townhouse projects, would remain robust as traffic conditions improved and the number of private cars increased. Industry experts estimated that about 300 villa developments, with a construction area of nine million square metres, were being constructed in Beijing. About 97.31 million square metres of property were developed in the first 11 months of last year, up 35.2 per cent year on year. In the same period, investment in property development rose 28.2 per cent to 628.8 billion yuan (about HK$592.4 billion), according to the National Bureau of Statistics. Meanwhile, the newspaper said the Ministry of Land and Resources would carry out an overall examination of land supply for the development of various development zones and science parks.
