Residential land prices in China's first-tier cities soar

Residential land prices in China's first-tier cities soared 19.02 percent on-year in the third quarter, while prices diverged dramatically between cities in other tiers, Ministry of Land and Resources (MLR) data showed. Residential land prices in China's four top-tier cities - Beijing, Shanghai, Shenzhen and Guangzhou - climbed 19 percent to an average of 21037 yuan ($3,103) per square metre, the fastest growth seen this year.
Second- and third-tier cities, though, recorded much smaller gains of 5.69 percent and 3.71 percent respectively, with prices reaching 5567 yuan ($821) and 2465 yuan ($363). "Residential land prices in first-tier cities and some popular second-tier cities are still growing rapidly, while most second- and third-tier cities had stable prices," the Ministry said in a report, noting the stark contrast in price growth.
Residential land prices in over a hundred major Chinese cities rose 6.77 percent in Q3 compared to a year ago, with average per-square-metre cost rising to 5781 yuan ($852), the Ministry's quarterly report showed. It added that the trend will continue in the short term. "Third- and fourth-tier cities with high inventories still lack price momentum," it said.
China's property market has rebounded since late last year, thanks to a flurry of government stimulus measures including relaxed home purchase policies and loose monetary policy that encouraged cheap credit. The emergence of "land kings" - real estate developers who snatched land at record prices in land auctions - this year has triggered panic buying that in turn propelled prices.
Mortgage loans to individuals soared in the first nine months of the year. But fast-rising home prices in overheated major cities sparked worries of asset bubbles and debt risk. Policymakers in more than 20 cities have imposed restrictions to deter speculative buying. But even as overheated cities vow to increase land supplies to curb prices, residential land availability in first-tier cities dropped more than 60 percent in the third quarter versus a year ago, while in second-tier cities land prices rose 1.01 percent, the report said.