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QINGDAO TODAY
在线翻译:
szdaily -> Business/Markets -> 
Developers push land prices up
    2019-05-01  08:53    Shenzhen Daily

THE premiums developers pay for land rebounded sharply in the first quarter of 2019 as credit conditions and purchase requirements eased, taking some firms by surprise and prompting caution from others on the pickup in prices.

Many land auctions failed to secure bids or the reserve price in the second half of last year, as developers faced tighter credit conditions and thinning profit margins following a prolonged government campaign to rein-in hot property prices and a slowdown in the economy.

But in the first quarter of 2019, the premiums land buyers are willing to pay over reserve prices rose to 19.1 percent on average, according to property researcher CRIC. The 2018 average premium was 9.4 percent — the lowest level in some years.

Second-tier cities have led the 2019 gains, with premiums in eastern Hefei and southwestern Chongqing’s at 86 percent and 25 percent, respectively.

Some auctions received hundreds of bids, in another sign that developers are eager to grab land.

“First-quarter land prices in some cities have already surpassed the market peak in 2016,” said CRIC researcher Xie Yangchun, citing Chongqing and Zhengzhou as examples. House prices reached record highs in 2016, prompting the government to introduce tightening measures.

“These cities have large land supply and high inventory risks, developers should be more careful when they acquire land at a high premium there,” Xie said.

Many land parcels in second-tier cities that failed to sell at auction last year were put back on the market in the first quarter and fetched prices above the reserve price of last year, CRIC said.

But with official price caps on houses still in place in some cities, the more expensive land costs may not translate into higher home prices just yet, potentially putting more pressure on profit margins.

The rebound comes hand in hand with looser credit conditions this year. Funds raised by China’s real estate developers in the first three months grew 5.9 percent from the same period a year earlier, compared with a 2.1 percent rise in the first two months, government data shows.

Another factor behind the land revival is that some land sales removed a requirement that part of the land developers buy must be set aside for rental housing, which could delay returns on investment.(SD-Agencies)

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