Land market at lowest point in three years

Updated: 2012-07-06 16:10

By Wei Tian (chinadaily.com.cn)

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Land sales revenue, a barometer of the developers' confidence, is at its lowest point in three years due to shrinking supply, especially in first-tier cities, a survey showed.

Land sales revenue in 20 key cities has shrunk to 240 billion yuan ($38 billion) in the first half of the year, 36 percent down from the same period last year, according to a survey conducted by real estate company Homelink.

First-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen saw their land sales income decline even faster, at 55 percent year-on-year.

A series of land market indices, including construction area and premium rate - the difference between the initial and the final price in an auction -  have all slid to their lowest levels since 2010.

Chen Xue, an analyst with the market research division at Homelink, said first-tier cities face bigger challenges because they have nearly run out of quality lots to be put on the market, and the ones left are marked with high prices.

"The two major concerns for real estate companies are the quality of the lot and its price, which leads to increasing conflicts between supply and demand," Chen said.

Chen said there will be more uncertainty on the land market in the second half. Meanwhile, land supply will also pick up by a wide margin as regulations on the property market ease.

weitian@chinadaily.com.cn