Failed Land Auctions Proliferate, Exceed 2012 and 2015 Highs

Caijing: 土地遇冷 流拍住宅用地超过400宗

In the chaos, not only new houses and second-hand houses, although during the National Day holiday, although the central bank announced the news of reducing the deposit reserve ratio, it was widely interpreted as a signal for the release of funds, but in fact, in the land auctioning and auctioning of heavy funds, the instances of failed land auctions has been accelerating, and the land sold for zero premium has also increased significantly.

Not long ago, a research report published by a research institute showed that the number of failed land auctions reached a record high this year. According to the data, among the 300 cities with statistics in the country, there have been more than 800 failed land auctions in the national real estate market in 2018, including 446 residential land plots with a total planned construction area of ​​56.45 million square meters, which is about 1.8 times the total area of failed auctions in 2017.

History rhymes:

In fact, reviewing the development of the real estate market in recent years, the phenomenon of failed auctions is not new. From 2011 to 2012, there was a peak in failed residential land auctions. From 2014 to 2015, there was another wave of failed auctions. After these two auctions, the real estate market has entered the bottom, the volume of transactions has fallen, and the price has fallen. In 2018, the failed auctions reappeared, and the planned construction area of failed auctions and the failed auction rate continued to rise, reaching a historical high.

Developers are worried about survival.

In this regard, Kerry's analysis report also said that the land market turned cold towards normalization, low premium and even the bottom price transaction became normal, and the number of land flow cases continued to increase. Under the circumstance that the regulatory policies continue to exert strength and the financing pressure of housing enterprises is becoming more and more serious, the wait-and-see mood of enterprises has become more intense, and the new land acquisition has been slowed down. Some housing enterprises have even withdrawn from the local auction market. Ke Rui Rui analysts predict that the land auction market will turn cold, the land price will be turned from the ups and downs, and some cities will be the first to adjust downward.

Everything is working against land prices.

Why are developers no longer keen on grabbing land?

Guo Yi, chief analyst of Heshuo, said that there are two main reasons: First, the cash pressure of real estate companies is now larger than that of the year. In the context of deleveraging, the cost of financing for housing companies is getting higher and higher, and the difficulty of financing is getting bigger and bigger. The regulatory authorities are also making three orders and five applications, and it is strictly forbidden to enter the real estate market in violation of regulations. From January to August this year, the country's housing enterprises raised a total of 739 billion yuan, a year-on-year decrease of 9%. Among them, the total amount of financing in August was only 74.4 billion, a year-on-year decrease of 23%. Therefore, under the pressure of huge funds, it is naturally more and more cautious for real estate developers to take their land.

Second, the local price limit policy has also curbed the enthusiasm of real estate companies to take the land. In the past two years, cities across the country have introduced various price limit policies in order to curb overheating of housing prices. After the price limit, the prices of these cities have almost become a horizontal line, and the average price per month is fluctuating several dollars. Although house prices have been effectively curbed, the real estate market has been distorted, and the prices of first-hand and second-hand houses have been upside down.

In addition, the number of land sold by local governments is growing, and the increase in land supply has also led to an imbalance between supply and demand in the market. According to the data of a research institute, since March this year, the newly-launched homesteads in the 300 cities nationwide have continued to grow year-on-year. The monthly growth rate is basically above 20%, and the individual months have even increased by more than 80%.

On the one hand, the money bag is tight, and the land is more rational; on the one hand, the land restrictions are strict, and the cost of land auction is high. Under such a joint effect, the developer’s enthusiasm for the land has dropped to the bottom.

The weak stock market could also play a role: it's cheaper to buy land through acquisitions.

If the land flow is increased, does it mean that the developers do not take the land to build the project? In fact, some leading developers with strong financial strength just think that the land cost obtained by bidding and auction is too high, and there are more restrictions, not directly in the land auction. In the competition, but in private, through the cooperation, mergers and acquisitions companies to buy shares, to obtain new land or project reserves.