Following the latest government effort to limit the amount of money flowing into property developers’ hands and to curb financial sector risk, an unusual situation has emerged — land sales are slowing even as property sales are accelerating, reported Caixin.
Previously, when real estate sales grew, cash-rich developers would load up on extra debt to buy land. “This logic has undergone some changes under current policy pressure,” said a senior executive at a real estate developer.
Since April, new home sales have been better than expected, largely driven by the release of pent-up demand as the housing market started to recover from the domestic Covid-19 epidemic.
In August, sales by China’s 100 leading developers rose over 30% year-on-year to RMB 976.2 billion ($142.8 billion), accelerating from a 25.7% rate the previous month and marking the fifth straight month of growth, according to property consultancy China Real Estate Information Corp.