China’s land auction premiums drop to lowest levels in over three years as price curbs show effect
Major developers scaling back on land-buying spree, and curbs bite on home prices
China’s land market continued to cool in August as developers remained cautious over the outlook for the nation’s property sector.
The average land auction premium over starting bidding prices in 40 major Chinese cities monitored by E-house China R&D Institute fell to 17.3 per cent – its lowest level since June 2015, during the last property downturn, and compared with 38.2 per cent a year ago.
Average land sale prices also dipped by 2.9 per cent from July to 4,472 yuan (US$654) per square metre, the fifth straight month-on-month decline.
Separately, another report by China Index Academy, which monitors a wider pool of 300 Chinese cities, found the average premium falling sharper to 9 per cent from 30 per cent a year ago, while average prices declining 9.8 per cent over July to 2,598 yuan per square metre.
“The continuous fall in premiums [being paid] is mainly attributed to high land prices set by local governments. In many places stringent conditions are attached to sales that have slashed saleable areas,” said E-house.