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Tuesday, 9 February 2010
2009 land sales cover 40% of stimulus cost
China’s government netted 1.6 trillion yuan (S$333 billion) from land sales last year, or 40 per cent of the cost of the nation’s two-year stimulus package.
(BEIJING) China’s government netted 1.6 trillion yuan (S$333 billion) from land sales last year, or 40 per cent of the cost of the nation’s two-year stimulus package.
The figures, released last week by the Ministry of Land and Resources, showed state land sales rising to a record, helping to fund the four trillion yuan plan.
The risk for this year may be that real estate sales and prices drop because of government efforts to cool the market, cutting into one of the main sources of revenue for the nation’s 31 provinces. Former Morgan Stanley chief Asian economist Andy Xie and Kynikos Associates Ltd founder James Chanos have warned that the nation has a real estate bubble that may burst.
‘Local governments were the biggest beneficiaries of China’s property boom in 2009,’ said Xing Ziqiang, an economist at China International Capital Corp in Beijing. ‘They may find that their financing is squeezed this year.’
China sold or allocated 319,000 hectares of land in 2009, 44 per cent more than a year earlier and the equivalent of three times Hong Kong’s land mass. Sales revenue climbed 63 per cent, according to the ministry’s data. Land sold for ‘real estate use’ accounted for 84 per cent of sales by value, with property used for infrastructure and industrial purposes accounting for the rest.
Low interest rates, record lending and surging housing prices have encouraged developers to buy land and build up reserves of property. Premier Wen Jiabao is trying to cool the market to prevent price bubbles and keep housing affordable.
‘Land assets have gradually become an important source of capital income and financing’ for the government, Minister for Land and Resources Xu Shaoshi said on the ministry’s website last week. ‘China has sold 5.3 trillion yuan of land in total between 1999 and 2008.’
The 1.6 trillion yuan of income from land sales last year, the equivalent of about 5 per cent of China’s GDP, came after the Land Ministry boosted supply and simplified procedures for buyers to bolster the economy during the financial crisis, Mr. Xu said.
‘There is a conflict of objectives between local governments and the central government,’ said Lee Wee Liat, a property analyst at Nomura Holdings Inc in Hong Kong. ‘The central government is trying to control increases in property prices, while local governments are the main beneficiaries of the increases.’
Surging home prices have prompted the government to crack down on speculation and tighten lending.
The central bank unexpectedly asked banks to set aside more money as reserves on Jan 12 and may raise the benchmark lending rate next quarter, according to a Bloomberg survey of economists on Jan 21.
Property prices in 70 major cities climbed 7.8 per cent in December, the fastest pace in 18 months. Sales jumped 75.5 per cent in 2009 to 4.4 trillion yuan, led by Zhejiang and Shanghai, according to government data.
In contrast, second- hand home sales in Beijing fell almost 70 per cent in January from the previous month and Shanghai’s new home sales halved as the government tightened policies, the official Shanghai Securities News reported on Feb 2.
For all of China, the volume of property sales may drop 10 per cent in 2010, BNP Paribas said in a Feb 2 report. That compared with a previous forecast of growth of as much as 5 per cent.
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2009 land sales cover 40% of stimulus cost
Bloomberg
08 February 2010
(BEIJING) China’s government netted 1.6 trillion yuan (S$333 billion) from land sales last year, or 40 per cent of the cost of the nation’s two-year stimulus package.
The figures, released last week by the Ministry of Land and Resources, showed state land sales rising to a record, helping to fund the four trillion yuan plan.
The risk for this year may be that real estate sales and prices drop because of government efforts to cool the market, cutting into one of the main sources of revenue for the nation’s 31 provinces. Former Morgan Stanley chief Asian economist Andy Xie and Kynikos Associates Ltd founder James Chanos have warned that the nation has a real estate bubble that may burst.
‘Local governments were the biggest beneficiaries of China’s property boom in 2009,’ said Xing Ziqiang, an economist at China International Capital Corp in Beijing. ‘They may find that their financing is squeezed this year.’
China sold or allocated 319,000 hectares of land in 2009, 44 per cent more than a year earlier and the equivalent of three times Hong Kong’s land mass. Sales revenue climbed 63 per cent, according to the ministry’s data. Land sold for ‘real estate use’ accounted for 84 per cent of sales by value, with property used for infrastructure and industrial purposes accounting for the rest.
Low interest rates, record lending and surging housing prices have encouraged developers to buy land and build up reserves of property. Premier Wen Jiabao is trying to cool the market to prevent price bubbles and keep housing affordable.
‘Land assets have gradually become an important source of capital income and financing’ for the government, Minister for Land and Resources Xu Shaoshi said on the ministry’s website last week. ‘China has sold 5.3 trillion yuan of land in total between 1999 and 2008.’
The 1.6 trillion yuan of income from land sales last year, the equivalent of about 5 per cent of China’s GDP, came after the Land Ministry boosted supply and simplified procedures for buyers to bolster the economy during the financial crisis, Mr. Xu said.
‘There is a conflict of objectives between local governments and the central government,’ said Lee Wee Liat, a property analyst at Nomura Holdings Inc in Hong Kong. ‘The central government is trying to control increases in property prices, while local governments are the main beneficiaries of the increases.’
Surging home prices have prompted the government to crack down on speculation and tighten lending.
The central bank unexpectedly asked banks to set aside more money as reserves on Jan 12 and may raise the benchmark lending rate next quarter, according to a Bloomberg survey of economists on Jan 21.
Property prices in 70 major cities climbed 7.8 per cent in December, the fastest pace in 18 months. Sales jumped 75.5 per cent in 2009 to 4.4 trillion yuan, led by Zhejiang and Shanghai, according to government data.
In contrast, second- hand home sales in Beijing fell almost 70 per cent in January from the previous month and Shanghai’s new home sales halved as the government tightened policies, the official Shanghai Securities News reported on Feb 2.
For all of China, the volume of property sales may drop 10 per cent in 2010, BNP Paribas said in a Feb 2 report. That compared with a previous forecast of growth of as much as 5 per cent.
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