Land sales in major cities up sharply in April

House prices likely to remain stable following property regulation policies

Land sales in major Chinese cities saw a significant increase in April, while the land premium rate stayed at a relatively low level, industry data showed.

In April, land sales in 50 big cities monitored by Centaline Group, a Hong-Kong based real estate agent, jumped 83.4 percent year-on-year to 284.2 billion yuan ($44.6 billion).

Seven first- and second-tier cities saw land sales exceed 10 billion yuan, with land revenue in Hangzhou totaling 17.9 billion yuan in April, up 237 percent year-on-year.

In the first four months, land sales in the 50 cities totaled 1.2 trillion yuan, up 48.8 percent year-on-year, according to Centaline data.

The land premium rate, which measures the amount that the highest-bidding property developers pay in excess of the starting land price, stayed at a relatively low level in the first four months.

The premium remained at around 10 percent in hot-spot cities, compared with about 30 percent on average during the past three years, according to Zhang Dawei, an analyst with Centaline Group.

“Thanks to government control measures, the land market has cooled to some extent,” Zhang said.

The transaction volume in many cities remained at a high level, especially in first- and second-tier cities, signaling a high willingness among property developers to snap up residential land, according to Zhang.

China’s property market, once deemed a major risk for the broader economy, cooled in 2017 amid tough curbs such as purchase restrictions and higher down payment requirements as the government sought to rein in speculation.

New house prices in first-tier cities declined 0.6 percent yearon-year in March, while prices of existing houses in these cities went down 0.1 percent year-onyear, according to the National Bureau of Statistics (NBS).

The property market in second-tier cities is also showing signs of slower growth, with the year-on-year growth of new house prices sliding 0.2 percentage points from a month earlier.

New house prices went down on a yearly basis in nine of the 15 major cities considered the “hottest markets.” On a month-on-month basis, new house prices fell in seven of the 15 cities, while North China’s Tianjin and Hefei, capital of East China’s Anhui Province, saw home prices flat with February. “Housing prices were generally stable as market controls have continued to take effect,” said NBS statistician Liu Jianwei.

For 2018, the government vowed to maintain the stability and consistency of property regulation policies and introduce a long-term mechanism for real estate regulation.

As China’s financial regulator tightens controls on property loans, many developers face liquidity pressure, and may become less active in buying land reserves in sub-prime locations, according to Zhang.