Housing land supply growth at 5-year high

The total supply of land for residential use in the first half hit a five-year high for year-on-year growth, with the average land price in major cities nationwide seeing an obvious rise, according to data released by the Ministry of Land and Resources (MLR) Tuesday.

Land supply for home­building was 55,300 hectares in the first half, up 36.9 percent year-on-year, the MLR said.

The average prices of land for residential use in 105 major cities rose to 4,799 yuan ($782) per square meter in the second quarter, up 6.13 percent year-on-year, according to the MLR.

Total sales income for local governments nationwide rose by 77.3 percent in the first half compared with the same period last year, reaching 1.7 trillion yuan.

"Developers' increased confidence in a good outlook for China's real estate sector is the main cause of a dramatic rise in land supply," Fan Xiaochong, vice president of Sunshine 100 Real Estate Group, told the Global Times Tuesday.

Due to previous strict controls on home prices by the government including limits on home purchases, developers were hesitant to buy land in the first half of 2012, but "they became active in buying land this year as signs indicated government curbs were not strictly executed," Fan noted.

The previous administration of the central government released a batch of home price control policies this March, including a 20 percent capital gains tax on secondhand property sales.

Only Beijing has actually implemented the capital gains tax since April, and the move so far has had limited impact on existing home prices because homeowners raised sales prices to offset the tax burden.

Media reported that home prices could be suppressed if more land plots were offered to ensure new home supply.

However, Liu Yuan, a senior research manager at Centaline China Real Estate, said that "if developers who have stockpiled land without any development are not punished by the government, new home supply for the coming years is still not a sure thing."

In the past, when the property market was prosperous, developers often hoarded land without developing it in order to wait for land and housing prices to rise.

Land that remains undeveloped for more than two years should be reclaimed by the government without compensation and assigned to other uses, according to a regulation released by the MLR in June 2012. A fine of 20 percent of the land sales price can also be levied on developers who leave land undeveloped for more than one year.