Analysts call on authorities to introduce a more rational bidding system

BEIJING: The Chinese government should quicken the pace of changing the land bidding system and increase land supply to curb another round of property price rises, industry experts said on Tuesday.

Pedestrians walk past a real estate billboard in Beijing's Central Business District. The average sales price of new apartments in Beijing reached 21,130 yuan per square meter during the first three weeks in March, up 12.2 percent from February. [Agencies]

Since mid-March, many cities' property prices, including new apartments and pre-owned homes, saw strong growing momentum, along with ballooning transaction volume.

For example, the average sales price of new apartments in Beijing reached 21,130 yuan ($3,093) per square meter during the first three weeks in March, up 12.2 percent from February, according to statistics from property agency Centaline China. And the price grew 11.5 percent further to 23,560 yuan per sq m in the last week of March, showing an accelerated pace.

Meanwhile, transactions in pre-owned homes exceeded 27,000 units last month, reaching a record high.

The most effective way to curb soaring property prices is to increase land supply and adopt differentiated mortgage policies for investment-oriented buyers, said Qi Fan, analyst with US-listed real estate brokerage firm Century 21.

However, transactions of residential land this year should not be made before April 10, when plans for the supply of land for residential and indemnified housing projects are announced, the Ministry of Land and Resources said on March 22.

Making more land available and introducing a more rational bidding system will help to calm consumer expectations of further price growth, said Qin Xiaomei, chief researcher with property services provider Jones Lang LaSalle Beijing.

High land prices are usually regarded as one of the major reasons for soaring property prices. Currently, the bidder with the highest price gets the land parcel.

But policymakers are mulling a more reasonable way to curb price growth. However, as local governments largely rely on land sales as their major revenue source, achieving such a change will not be so easy.

Xinhua News Agency published editorials for six consecutive days, criticizing local governments for deriving a high percentage of their revenue from the sale of land, which the news agency said was the main cause of overheating in the property market.

"I don't think there is a need to launch more tightening policies in the short term. If prices still rise quickly, then the down payment and mortgage rate for luxury apartments and second home buyers can be further increased," said Liu.

For Qin, enhanced implementation is in fact more important than merely introducing new policies.

Since the end of last year, the central government has launched a slew of measures to curb the excessive property price growth in some cities, involving land supply, taxation, down payments and mortgage rates.

However, some smaller banks still offer preferential mortgage rates for second homebuyers.