Chilling house market cools land sales

China's chilling property market has started to affect the price of land, cooling sales in Chinese cities in the second quarter, according to a monitoring report by the Ministry of Land and Resources (MLR) on Wednesday.

Growth of land prices began to slow slightly in the April-June period after rising for six consecutive quarters, the MLR said in its latest monitoring report.

Still, land prices in major cities kept rising mildly in the second quarter from last year's level, the report said.

On a monthly basis, the growth rate continued to subdue in the period.

The average land price of cities under MLR monitoring stood at 3,458 yuan (562 U.S. dollars) per square meter, the report noted.

"After two quarters of wait-and-see sentiment, the cooling property market has gradually spread to the land market," said Zhao Song, who leads a team to monitor land price fluctuation in the country.

Data from the Ministry of Finance also showed that land sales posted meager 7.3-percent year-on-year growth in June, but jumped 26.3 percent from a year ago to 2.11 trillion yuan in the first half.

"I think the decline in the property market has not yet touched the bottom," Zhao said, adding the slowdown in the real estate market will continue if the government does not ease its control to reverse market expectations.

According to the MLR report, the average land price for residential housing development reached 5,214 yuan per square meter in the second quarter.

Land prices in the Pearl River Delta, home to the first-tier city of Guangzhou, still increased rapidly in the period, while land sales in Beijing and other cities in the Bohai Rim saw a sharp slowdown and land transactions in the Yangtze River Delta remained steady, according to the report.

As the market cooled, Chinese property developers became more cautious, spending 4.2 trillion yuan in investment in the first six months, data from the National Bureau of Statistics (NBS) revealed.

The 14.1-percent growth in property investment in the January-June period represents a drop of 0.6 percentage points from the January-May period and a drop of 2.7 percentage points from the first quarter.

New home prices in half of a sample of 70 major cities showed month-on-month drops in May, compared with eight in April. Only 15 cities saw month-on-month increases, down substantially from 44 in April, according to the NBS data.

"After nearly a decade of rapid growth, it's now time for the property market to show some cyclical changes," Zhao said.