(Yicai Global) July 22 -- Property price rises in the first-tier city of Guangzhou are moderate in comparison to many second-tier cities in China. This might be related to the abundant supply of land in the city.
The government's shortage of money has been driving land sales. Since 2010, Guangzhou has been increasing its land supply. Between 2013 and 2015, over 10 million square meters of land were auctioned. Last year, this figure reached 16.91 million square meters. As long as land supply keeps increasing, there is little room for large housing price increases.
Good real estate sales in the first half of the year has greatly reduced the city's housing inventory. In the first half of 2016, housing prices in Guangzhou averaged CNY16,141 (USD2,420) per square meter, rising 9 percent year on year, statistics show. Prices in five central areas rose by 13 percent.
Prices in other areas of Guangzhou, though, such as the Asian Games City, Guangzhou South Railway Station and Guanggang Xincheng are relatively stable. The average price of a new house at the Asian Games City area is around CNY10,000 per square meter, almost the same as the opening price in 2010. R&F Properties [HKG:02777] and four other property developers in the area are still in deficit.
Guangzhou's real estate sector performs modestly even compared to many second-tier cities such as Nanjing, Hefei and Suzhou as well as other major cities in the Pearl River Delta area. The situation might continue for a while as only a quarter of the city's annual land sale target was sold in the first half of the year.