Land prices to swell in 2013

By Chen Yang Source:Global Times Published: 2013-1-16 0:23:01

China's land prices will rise faster in 2013 than in 2012, but still at a moderate pace, as the country's urbanization measures will fuel growth while property control policies prevent a rapid increase, the Ministry of Land and Resources (MLR) predicted Tuesday.

The country's average land prices rose slightly to 3,129 yuan ($503) per square meter by the end of 2012 from 3,049 yuan per square meter a year earlier, Zhao Song, director of the China Land Surveying and Planning Institute with the MLR, said at a press conference in Beijing.

The year-on-year growth rate of residential land prices was 2.26 percent in 2012, and commercial land prices grew at 3.34 percent, both rates nearly the lowest in a decade, Zhao said.

But the latest data from the China Real Estate Index System (CREIS) showed that average residential land prices in 300 Chinese cities rose 7.4 percent in 2012, mainly boosted by increased demand in Beijing and Shanghai.

Housing prices in first-tier cities are likely to face more upward pressure as land supply is limited, CREIS said in a report published last week.

Zhao expects China's land prices to rise moderately in 2013, fueled by the country's economic recovery but also curbed by property control policies. Commercial and residential land prices will be stable generally but fluctuate more in certain cities, she said.

The MLR will consider new policies to regulate the property market and prevent control from loosening in the event of a quantitative easing environment, she noted.

Analysts said a recovery in China's land market is driving up housing prices, which may lead to a cycle of increases where the land and property markets spur each other higher.

"Housing prices began to show signs of warming-up in the second half of 2012, so property developers have shown growing interest in replenishing stockpiles of land," Zhang Dawei, research director at the Beijing office of Centaline China Real Estate, told the Global Times Tuesday.

"Higher land prices will further push up home prices," Zhang said.

The MLR also rebuffed recent media reports that an increasing number of super-expensive properties, known as "land kings," were emerging in land auctions in cities such as Beijing, Shanghai and Nanjing.

The emergence of land kings is usually considered a signal that the property market is heating up. But 2012 saw only two land parcels sold at five-year high prices per square meter when compared with previous land transactions in the same city, Zhao said, without naming the two land kings.

"The MLR's definition is more specific, as too many land kings might cause panic by boosting market sentiment that high land prices would push up home prices," Yang Hongxu, an analyst from E-house China R&D Institute in Shanghai, told the Global Times Tuesday.

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