China land price inflation slows

The rate of land price inflation on the mainland eased in the first quarter of this year for the first time in two years, official data showed yesterday, in another sign that the frothy real estate market is cooling off amid tight credit conditions.

Data from the Ministry of Land and Resources showed land prices in 105 major cities rose 1.89 per cent in the first three months, slower than 1.96 per cent growth in the final quarter of last year. Land prices for residential properties rose 2.11 per cent, slower than the 2.64 per cent growth in the previous quarter.

"Land prices will probably stop rising and start to fall in some cities [in the second quarter]," said Zhao Song, the head of the China Land Surveying and Planning Institute, a research unit under the ministry.

Apart from the slowing economy and moderating credit growth that will ease land price inflation, investors also need to monitor the regional land market divergence and the rising proportion of land supply for residential property use, Zhao told a press conference in Beijing.

After a land buying spree last year, many mainland developers have cautioned against building up large land reserves this year, particularly in cities that are facing an oversupply of homes.

Their top priority is to quicken construction and secure contracted sales at a time when banks are cutting their exposure to the real estate industry, making it even harder for middle-class families to afford the record high home prices in China.

Bucking the trend is the price of industrial land due to increasing demand for land to build logistics facilities.