Both land sales and prices have declined in 300 Chinese cities in the first ten months of 2014. Although property sales have rebounded significantly during the months of “Golden September” and “Silver October”, new home prices have had a capping price growth, reflecting an overall low level of market sentiment.
Land supply and demand in the first tier cities has fallen in October 2014, resulting in land sales premium hitting a 34% high. Residential land supply reached 3.47 million square feet (-33% M-o-M; -35% Y-o-Y), while total residential land sales amounted to 1.45 million square feet (-54% M-o-M; -27% Y-o-Y) and RMB22.6 billion, with high land sales premium of 34%. However, in tier two cities, there is a great sense of polarization in land sales.
Over three million square feet of land sales were recorded in 35 cities in October (down 10% M-o-M and 45% Y-o-Y). Cities with land sales amounted to over 1,500 square meters, including Chongqing, Wuhan, Zhengzhou and Xian from January to October this year. On the other hand, Ningbo, Wenzhou and Hohhot saw land sales of less than three million square meters over the same period.
Tracking the recent easing in property market policies, the home sales market has rebounded since then. Due to positive factors such as market recovery and cash flow-back, a renewed active cycle is expected to be seen in the land market from now until the end of the year. Meanwhile, more high quality land pieces will be launched in the market, which may lead to higher land premium in the near future.