Chinese land sales hit a record Rmb4.1tn ($672bn) in 2013 following a lull the previous year, providing more evidence that the country’s property market is once again in full throttle. But although construction activity is likely to bolster the economy in 2014, there are signs that land sales could slow, weakening local governments’ ability to raise money.
The value of sales, Ministry of Land and Resources data show, eclipsed the previous record of Rmb3.5tn in 2011. Land zoned for real estate use, which accounts for about one-quarter of zoned land sales, rose by nearly 27 per cent year-on-year.
The land data follow earlier housing research that showed the value of new home prices accelerated to $1.1tn in 2013.
Li Keqiang, Chinese premier, who took power in March 2013, is considered more comfortable with market mechanisms than his predecessor, Wen Jiabao, who staked his reputation on a multiyear effort to cap housing prices by fiat.
Strong land sales after a year of robust housing sales show developers are replenishing land banks, said Thomas Orlik, economist with Bloomberg Financial.
Construction will help drive growth in 2014, he said, but on the negative side, “it points to the continued outsize and unsustainable role real estate plays in bolstering China’s economy”.
Over the past five years, Beijing has focused its property policies on controlling price rises through administrative measures such as purchase restrictions.
But recent attacks by state broadcaster China Central Television could suggest a change of tack, signalling that President Xi Jinping’s year-old administration wants to put an end to the cosy relationship that has developed between property companies and local governments.
Tax breaks designed to stimulate land sales have been given by local governments to developers, in turn sending land and property prices ever higher and creating more opportunities for official corruption.
But Zhao Xijun, vice- director of the Finance and Securities Institute at Renmin University in Beijing, said the rise in sales also demonstrated slowing economic growth.
彭博财经(Bloomberg Financial)经济学家托马斯?奥尔利克(Thomas Orlik)表示，继全年房地产销售强劲之后，土地销售额呈现强劲态势，表明开发商正在补充土地储备。