Analysts hold bullish outlook as developers go on spending spree.
Land sales in major cities hit a record high in 2013, with the transaction amount in four top-tier cities exceeding 500 billion yuan ($82 billion), rising roughly 150 percent from 2012, latest figures show.
Beijing, Shanghai, Guangzhou and Shenzhen sold a combined 501.5 billion yuan worth of land this year as of Dec 20. Shanghai alone has auctioned off 217.8 billion yuan worth of land, data compiled by property agency Centaline show.
The Chinese property market also saw a boom, as land got more valuable during what has been red-hot bidding among developers with deep pockets.
A plot of land in Shanghai's downtown Xujiahui area was sold for 21.77 billion yuan in September, becoming the nation's most valuable land site since 2010.
In the same month, a residential land parcel located off Beijing's East Third Ring Road was bought by Sunac China Holdings Ltd for 73,100 yuan per square meter of buildable space, becoming the nation's most expensive land in square meter terms.
Major developers are taking the lead in the land purchase spree. The top 10 developers, including China Vanke Co Ltd, Poly Real Estate Group Co Ltd and Evergrande Real Estate Group, have stockpiled 312 billion yuan worth of new land plots so far this year (as of Dec 19), surging nearly 90 percent from the whole of 2012, according to Centaline data.
According to Chen, some local governments are increasing or planning to increase land supply to tame soaring home prices.
"For instance, the Shanghai municipal government announced in November it would increase its land supply for housing construction by 30 percent - 1,000 hectares - this year on the basis of the average annual supply of the last five years," Chen said.
However, Chen said, only about 40 percent of new land supply will be developed into residential projects. The remainder will be used for industrial or commercial properties.
"The new central government leadership has recognized the fundamental solution to controlling the skyrocketing home prices is to increase the supply rather than restrict demand," added Chen.
Zhang Hongwei, research director of Shanghai-based property consultancy ToSpur, believes the land supply boom is laying the groundwork for long-term property policies, such as a property tax.
"Of course, a better-off macroeconomic background will be very important," added Zhang.
New home prices in the nation's 100 major cities averaged 10,758 yuan per sq m in November, rising for 18 consecutive months in month-on-month terms, a report from the China Index Academy, a research arm of Soufun, China's largest property website, showed.
Among the 10 biggest cities, Shanghai saw the highest property inflation at 1.83 percent in November from October, trailed by Nanjing in Jiangsu province, Guangzhou, the capital of Guangdong, Hangzhou, the capital of Zhejiang, and Tianjin, one of the four municipalities of China, all of which posted a month-on-month rise between 1.5 percent and 1.8 percent.
On a yearly basis, new home prices of the 10 largest cities grew 16.56 percent in November, extending the rising streak to 13 months and pointing to robust housing demand in these top-tier cities.
Source: China Daily
