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Stimulus Measures Cited for Surge in Residential Land Prices in 2016

By Pan Che and Huang Ziyi
The Ministry of Land and Resources said Monday that average residential land price in China increased 7.91% in 2016, up nearly 4 percentage points from a year earlier. Above, a farmer works near residential real estate in Changzhou, Jiangsu province, on March 25. Photo: Visual China
The Ministry of Land and Resources said Monday that average residential land price in China increased 7.91% in 2016, up nearly 4 percentage points from a year earlier. Above, a farmer works near residential real estate in Changzhou, Jiangsu province, on March 25. Photo: Visual China

(Beijing) — Residential land prices in China surged an average 7.91% last year, after stimulus measures fueled an increase in real-estate investment, the Ministry of Land and Resources said.

The jump was even more dramatic in China’s largest cities, known as first-tier cities, where the average price for residential land soared 19.6% in 2016 over the previous year.

These increases came on top of big spikes in 2015: Overall in China, the average residential land price jumped nearly 4%, and 10.9% in the first-tier cities, official data showed.

Zhao Song, an official with the Ministry of Land and Resources, attributed the increase on Monday to the impact of stimulus measures such as property tax reductions, easy access to loans and property destocking plans on the real-estate market.

Increased investment by property developers has also contributed to the rise in land prices. Real-estate investment grew 6.9% year-on-year in 2016, and residential property investment, which accounts for about 67% of total real-estate investment, increased 6.4%, official data showed.

Industrial land prices also picked up last year on improved profitability of Chinese industrial enterprises, which returned to positive territory in 2016 after logging a 2.3% decline in 2015. The average industrial land price edged up 2.84% year-on-year in 2016.

The average commercial land price grew 3.09% in the same period.

On a regional basis, all land prices rose, but commercial property in the Pearl River Delta and Yangtze River Delta regions saw price increases slow.

Residential land prices in first-tier cities, areas surrounding Beijing and some cities in the Pearl River Delta are still continuing to rise.

“It’s worth noting that residential land price growth softened in the first quarter of 2017 after edging up for several consecutive quarters,” Zhao said.

The average residential land price rose 2.06% in the first quarter, down from a 2.18% increase in the fourth quarter of 2016.

In the first quarter, land supply for housing increased a combined 84 million square meters in 105 major cities monitored, up 9.25% year-on-year, official data showed.

Meanwhile, land supply in first-tier cities increased more than 50% from a year ago.

Contact reporter Pan Che (chepan@caixin.com)

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