Nanjing property market U-turns as government cooling measures take hold
City’s land authority cancels three of five planned land sales expected during a two-day period ending last Friday, while the remaining two were auctioned off for less than nearby sites
A set of poor land sales results have highlighted the softening real estate market in Nanjing, reflecting the effectiveness of recent government measures to cool a market that was seen as tipping towards overheating, exemplified by a strong buyer response for a home that had been the scene of a domestic tragedy in 2011.
Land authority officials in the city – the capital of Jiangsu province and the second largest city in the East China region – cancelled three of five planned land sales due to take place during a two-day period ended last Friday, while the remaining two sites were sold for less than those fetched by nearby sites at earlier auctions.
At last week’s tender, Longfor Properties won a site for 2.36 billion yuan (US$344.01 million), or 13,993 yuan per square metre, 22 per cent lower than a site across the road that was bought by China Overseas Land and Investment last year. A second site bought by a unit of China Merchants Property Development went for a 36 per cent discount with a nearby comparable from an earlier auction.
“Buyers expect home prices to go down following the cheaper land sales. Thus more will take a wait-and-see approach,” said He Zhijie, manager of Nanjing Centaline Property Consultants.
The home purchase frenzy reached a crescendo in June when a villa, whose owner was killed and dismembered by his wife in 2011, received 138 bids. The home was eventually sold for 7.86 million yuan, 25 per cent higher than market valuation.
Sentiment towards the city’s property market has been under pressure since national and local governments imposed price caps and tightened mortgage lending.