Chinese developers loosened their purse strings at the start of this year to replenish land banks in first-tier cities and a few second-tier ones on high expectations they will be the first areas to see a housing market recovery due to policy relaxation. However, analysts warned that if reality fell short of expectations, interest would quickly cool, resulting in a similar pattern to the one seen last year. Possible catalysts for such disappointment mainly lurk on the policy side, including a serious effort to push ahead with property ownership registration next month. A pilot scheme to blacklist developers who fail to pay land premiums in a timely manner or begin construction as scheduled, reportedly set to start this year in 11 cities including Chongqing and Nanjing, would also make developers rethink aggressive land bank building, analysts added. "Developers have sufficient budget at the beginning of the year, and land markets in first- and second-tier cities will be hot," said David Hong, a senior analyst at China Real Estate Information Corp (CRIC). Beijing raked in 3.6 billion yuan (HK$4.5 billion) on Tuesday alone through the sale of three parcels of land, one to Greenland Group, one to Longfor Properties and the other to a consortium led by Cifi Holdings. Land sale revenue in the capital topped 34 billion yuan last month, according to CRIC data. However, an 18 per cent month-on-month land premium gain in first-tier cities last month stood in sharp contrast to a 68 per cent fall in third- and fourth-tier cities. Revenues in second-tier cities dropped 35 per cent. Li Wenjiang, chief analyst at property consultancy Hopefluent, said: "Developers will also be looking at smaller cities neighbouring first-tier cities, such as Foshan near Guangzhou and Dongguan near Shenzhen. "They've already removed home purchase restrictions and are receiving strong housing demand from residents in the first-tier cities, as improving transport cuts driving time to only one hour." Residents in the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, as well as Haikou on Hainan Island, are still barred from buying multiple homes. However, other cities have removed such curbs since the middle of last year as part of their efforts to stimulate demand for housing. Developers returned to the land market in October, after retreating in the previous few months. The People's Bank of China cut interest rates in November for the first time in more than two years and lowered banks' reserve requirements this month in an attempt to avoid an overly sharp economic slowdown. Economists expect further cuts, which will pump up liquidity and make mortgages cheaper and easier. Such policies have made developers more optimistic that the mainland housing market will gradually recover this year. "However, developers will have to be more cautious in picking the right land parcels," Hong said. "After all, now is different from a decade ago. Developers will not necessarily be able to make hefty profits from any plot acquired."