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Land sales in China's 10 major cities more than doubled in the third quarter compared with the previous one, with the price premium picking up, fueling expectations of a speedier rebound in the country's real estate sector.
Statistics from real estate service provider Homelink showed that local governments in the 10 cities, including Beijing, Shanghai and Guangzhou, received 135.2 billion yuan ($20.8 billion) from selling land parcels in the third quarter, up 123.8 percent on the second quarter. Floor space sold during the same period jumped 70.1 percent.
Meanwhile, the four key cities - Beijing, Shanghai, Guangzhou and Shenzhen - saw their land revenue increase 355.7 percent to 41.47 billion yuan in the third quarter. And the price premium of land hit 23.1 percent, a record high since the government introduced a serious of tightening measures in 2011.
Beijing received 25.7 billion yuan from selling land in September, which exceeded the total amount from January to August, according to Homelink.
The warming up of the land market is due to local governments' eagerness to launch more quality land parcels onto the market, as well as falling inventories and property developers' improved cash flow, said Qin Xiaomei, chief researcher at Jones Lang LaSalle Beijing.
According to the Ministry of Land and Resources, only 47,200 hectares of land were in place for residential house building, accounting for 29.6 percent of the ministry's annual plan for 2012.
Meanwhile, the country's fiscal income climbed 10.8 percent in the first eight months of 2012, down 20.1 percentage points compared with the same period last year, compelling local governments to take measures to deal with declining revenues.
In addition, an increasing number of property developers, especially the major players, have been more active in the land market since August, as their sales and access to bank credit continued to improve.
China Vanke Co, the country's biggest property developer in terms of market value, paid 4.67 billion yuan for two parcels of land in Guangzhou and Hefei on Sept 5 and 6, which was 1 billion yuan more than the company spent in August.
Inventory levels appear to be falling in many big cities, countering expectations that it would take years for the market to absorb the large number of empty apartments, Standard Chartered said in a research note on Wednesday.
"Indeed, inventory depletion looks even more likely to be an issue for the second half of 2013, particularly in those big cities, where new land supply is limited," said Stephen Green, an economist at Standard Chartered.
Signs of life in the land market, together with a recovery in both property prices and sales, suggest that China's real estate sector is on the fast track to recovery, analysts said.
"China's residential housing sector will turn from a drag to a positive for the economy in the first quarter of 2013," said Green.
A return to growth for this sector would be a much-needed boon not only for heavy industry, but also for the furniture, home decoration, electrical goods and auto industries, he added.
House prices in 100 major cities across China climbed further in September, the fourth consecutive rise this year, according to statistics from China Index Academy.
The average price of new homes in the 100 cities increased 0.17 percent month-on-month to 8,753 yuan per square meter, according to the Beijing-based research institute.
However, the rate of growth is shrinking, compared with the 0.24 percent rise in August, said the academy.
"I expect prices to stabilize or gradually pick up in the remaining months of this year," said Carlby Xie, head of research at real estate consultancy Colliers International (Beijing).
"However, fueled by soaring land prices and the dropping inventory, home prices in the country's big cities may see a strong rebound after the first quarter of 2013, due to the demand and supply relationship," Xie said.