Market expectations pick up, prices remain reasonable

Many are worried that high land prices may translate into higher property prices. Analysts say high land prices so far only occur in big cities, and the government's curbing policies on land have also helped to prevent the prices from going higher.

Property developers snatched up land in China's largest cities at record prices in June. That enthusiasm is spreading to second tier cities too. Experts say this shows property companies are more confident this year.

"We're seeing a rebound in enthusiasm from developers in buying up land since the fourth quarter of last year. Competition has also heated up in the market. So new land is being snatched up at a quick pace." Wang Juelin, Researcher OF Min. of Housing & Urban-rural Dev't said.

Despite this, analysts say land prices are still reasonable overall, as high prices are mostly seen the country's top tier cities.

There is another reason why prices are under control. The government launched a curbing policy in 2010 to place a cap on land auctions. Once the ceiling is reached, the developer who's willing to build more AFFORDABLE housing will get the land.

"Once land prices exceed the cap required by the government, developers compete for building affordable housing. This prevents excessively high prices from occurring." Zhang Dawei, Gen. Manager of Marketing Dept. of Centaline Property said.

So far over 770 thousand square metres of affordable housing was constructed under this policy. Cities such as Guangzhou, Nanjing, Hangzhou and Chengdu have already adopted this policy.