The Beijing government over the weekend revised up its land supply plan, but to a level that’s not as large as the headline figure suggests, raising doubts whether the actual supply will be enough to rein in home prices. In its residential land supply plan for the five years to 2021 the municipal government has promised to provide 6,000 hectares that could translate into a total of 1.5 million homes, or 1,200 hectares with 300,000 units per year. This is almost twice the size of a previous plan announced in February, in which only 610 hectares of land was to be made available for residential use, and much higher than the 454 hectares of actual supply in 2016. Analysts said the revised plan is not a radical change from previous policy, but amends the supply issue by bringing it closer into alignment with actual demand. Much of the annual land supply is reserved for public housing – compensation homes tied to relocations and public rental homes – leaving only 650 hectares (162,500 units) for commercial use. That’s much higher than the February plan, in which only 260 hectares were reserved for commercial homes. The problem is, the February plan itself is the result of near-70 per cent cut from 2016 levels, when 850 hectares were allocated for commercial use. Commercial land supply averaged 860 hectares annually through 2012 to 2016. Beijing residential land supply cut by half this year Zhang Dawei, chief analyst with Centaline Property, said the revised land supply is in response to a directive released on April 1 by the central housing and land ministries which stipulated that the next five-year land supply plan should be raised, if a city is experiencing rapid home price inflation. The document said that areas with a housing inventory of less than six months should “significantly accelerate” the pace of supply pace. Beijing’s February plandoes not meet that requirement. Analysts said a bigger uncertainty hanging over Beijing’s housing market is the actual supply. The city has a history of setting land supply targets which it fails to meet. At the beginning of 2016, the government promised 1,200 hectares of residential land: 350 hectares for public housings and 850 hectares for commercial housing. But by the end of the year only 104 hectares were supplied for commercial, which means a fulfilment ratio of 12.2 per cent. Inadequate land supply is believed to be a major factor behind the city’s 36.7 per cent rally in home prices last year. A review of the capital city’s housing commission data showed there has been a persistent gap between land supply targets and actual supply over the past five years. 2013 was an exception that saw actual supply exceed, the remaining years saw lands supply fall to about half of target. Minsheng Securities has forecast 2017 actual land supply will be 875 hectares, assuming the government fulfils half its commercial residential land supply target, and 100 per cent of public home land supply. The broker forecasts actual annual land supply of 875 hectares, on par with that of 2015, and 73 per cent of levels in 2014. “Although the 875 hectares for 2017 is much higher than that of 2016, it is not big compared with 2011-15. It is actually a normalisation,” said Xu Chao, an analyst with Minsheng. “Home prices in Beijing are more likely to be flat, or fall slightly this year.” The boost in residential land supply is the latest effort to arrest the city’s skyrocketing home prices. On March 17, the Beijing authorities broadened the definition of “second-time” home buyers to include those who have no homes under their names, but have a mortgage history, thus subjecting them to higher down payment requirements. On March 24, they then raised the purchase threshold for people who have divorced for less than a year, as part of efforts to prevent individuals from circumventing rules through fake divorces. Within a 10 day period beginning March 17, Beijing announced nine successive directives in what analysts said were an attempt to tamp down price inflation – and even froze market transactions. The policy worked to cool turnover and prices. After a 78.4 per cent week-on-week decline in new home sales in the first week after upgraded controls imposed were imposed from March 27, sales further slumped 24.1 per cent in the second week ended April 9, according to Centaline data . The 481 units sold that week was the lowest since the Lunar New Year. Ordinary Beijing home prices, excluding commercial-converted apartments, fell to 41,850 yuan per square metre, a drop of 5.9 per cent prior to the restrictions. Converted apartment sales, previously an extremely popular product, plunged sharply. Turnover tumbled from 2,265 units in the pre-curb week to 62 units in the first week after the curb, and further cooled to 53 units in the second week. Average transaction prices eased to 34,828 yuan per sq m from 47,727 yuan per sq m in the latest week. On March 26, Beijing officials also clamped down on converted apartment sales, which previously made up 60 per cent of new home sales. Developers brace themselves as Beijing gets tough on flats sold on commercial land Pre-owned homes, previously the majority of transactions, also tumbled with weekly sales slumping 70 per cent over previous week to 2,609 units, the lowest since Lunar New Year. “The announcement of the Xiongan New Area on April 1 is a double whammy to the market, besides the policy curbs, as people flocked to the new area looking for opportunities,” said Chen Xiaoqing , an analyst with Centaline.