There has been a sharp rise in the number of land plots in Chinese cities going unsold during the first seven months of 2018, which suggests that Beijing’s deleveraging drive may be starting to cool the country’s red-hot property market, according to Bloomberg.
A total of 419 plots of land went unsold during land auctions in Chinese cities between January and July this year, 78% more than during the same period in 2017, data by analysts China Real Estate Information Corp shows.
Bloomberg suggests that the reason for the surge in failed land sales is that the government’s curbs on property speculation and borrowing levels are starting to squeeze the profit margins of developers.
Seemingly attractive plots in major cities including Guangzhou, Shanghai, Hangzhou, Suzhou and Hefei have all gone unsold recently, with one site in Guangzhou failing to sell in six separate auctions despite the government continually lowering the offer price.
Housing prices are still rising fast in China, with prices posting the largest monthly rise in nearly two years in June, but a spike in unsold land has been a reliable indicator of a coming downturn in the housing market during the last few years, according to Bloomberg.