Many local officials announced the cancellation of price limit for land auction, which experts said is conducive to high quality and good price

Our reporter Xie Lan

Trainee reporter Chen Xiao

Recently, many places across the country have announced the cancellation of price limits in land transfer.

On October 18, Xiamen Natural Resources and Planning Bureau announced that it planned to transfer 2023P12 commercial and residential land on November 7. The announcement showed that the plot was sold by auction, without a base price for auction, and the transferee was determined according to the principle of the higher price.

The previous announcement on the transfer of residential land in Xiamen showed that all plots were sold by auction in the form of "fixed quality, limited house price, limited land price+lottery". When the bidder's quotation reaches the ceiling price, the bidder will be determined at the auction site by means of notary lottery. The transaction land transfer fee is the bidding ceiling price, and the ceiling price is generally 10% - 15% higher than the starting price.

Previously, many places in the country adopted the land auction price limit model. In recent years, in addition to Xiamen, Chengdu, Jinan, Hefei and other cities have successively implemented the "cancellation of land price limits". For example, on October 9, Jinan Municipal Bureau of Natural Resources and Planning issued an announcement to adjust the bidding rules for two batches of land to be auctioned, namely, JZPGZ (2023) No. 9-1 and JZPGZ (2023) No. 10-1. The newly released listing document shows that the land ceiling price has been cancelled.

On October 12, Hefei Land Market Network disclosed the list of the third batch of residential land proposed to be transferred in Hefei. According to the land transfer announcement, six plots with a total area of 571.058 mu will be transferred on November 2, and will be sold by auction, that is, the bidder will bid by raising a board, and the bidder who offers the highest price and is higher than the reserve base price will be the winner.

Previously, Chengdu also issued a document saying that the commercial residential land in the central urban area was auctioned at "competitive land prices", and the commercial housing built on the newly transferred land was priced by the enterprise according to the market situation. In principle, in addition to the overlapping construction within the parcel of land and the public service supporting facilities such as green space, roads and elderly care facilities around the parcel of land, which are clearly defined in the regulatory detailed planning, the newly transferred residential land will not be required to be equipped with additional construction.

Zhang Hongwei, the founder of Jingjian Consulting, told the Securities Daily that Hefei, Jinan and Chengdu were among the first cities to adjust the policy and rules of this round of land auction, and the ceiling limit on land price was lifted, which means that the policy of "high price wins" was implemented. It is expected that other cities, especially tier one and tier two cities, will also implement the local auction policy as soon as possible. At the same time, the original local auction policies such as competitive construction, competitive self holding, "competitive quality+lottery" may also be phased out of the market.

So, how will the cancellation of land auction price limit model in many places affect the real estate market?

Chen Wenjing, the market research director of China Index Research Institute, told the Securities Daily that after the cancellation of land price restrictions in mature regions, the price of high-quality land may rise, which will drive the upward expectation of market transactions, and will also positively drive the current "stable house price" and "stable expectation".

"The rules of land auction in various regions, especially in the first and second tier cities, are more complex, and the existing rules are basically the result of the continuation of the implementation of the market since the hot stage." Zhang Hongwei said that now the land auction market in various regions, especially in non first tier and non strong second tier cities, is cold, and the cancellation of the original land auction rules will help reduce the threshold of land auction and increase the activity of the land market.

"It is expected that in the future, all kinds of cities will give full play to the market regulation role of land prices, encourage high quality and good price, good projects and high quality projects will no longer be restricted by the price limit policy, and such projects, especially projects in high-quality sections of the main urban area, will drive the first recovery of the housing market in core first tier and second tier cities." Zhang Hongwei said.

"For the land market, returning the land price to the market is to some extent conducive to boosting the sentiment of the land market, especially in hot cities and core areas, and more cities may follow up." Chen Wenjing said, however, the current reversal of the sentiment of land auction still depends on the degree of recovery of the sales side. With no sustained and substantial improvement in sales, for most cities, The market effect driven by the adjustment of land auction rules may be limited.

key word: Land market Land price Ceiling price massif second-tier cities