Shrinking land transactions raise supply concerns

The reluctance of Chinese property developers to buy land in the wake of the government's tightening policies have triggered concerns about future land shortages.

During the January-May period, Beijing sold 57 plots of land, with transfer fees amounting to 13.56 billion yuan (2.14 billion U.S. dollars), down 48.7 percent year on year, statistics from the city's land management department showed.

Of these transactions, only 7 plots were sold for residential use, a significant decrease from a year earlier.

Meanwhile, as of May 21, the number of failed land auctions amounted to 107 in 20 major cities monitored by real estate agency Homelink this year, up 32.1 percent from a year earlier.

Fan Xiaochong, vice president of the Sunshine 100 Real Estate Group, attributed the decline in land transactions to excessive inventory, a high debt ratio, costly financing and the government's policy curbs.

"If the transactions continue to be sluggish, housing supplies in the coming one to two years will be affected," he said.

According to statistics from the National Bureau of Statistics, residential housing construction started on 406.06 million square meters of land in the first four months of the year, down 7.9 percent year on year.

Warning of a supply gap, Chen Guoqiang, vice chairman of the China Real Estate Society, said the government should maintain a steady supply of land while offering favorable policies, including credit support, to land developers.

China's home sales have slackened in response to the central government's tightened controls, including purchase bans and credit restrictions, which have created financial pressure for developers.