An article in China’s National Business Daily has revealed that property tycoons have been aggressively bidding for land in the eastern city of Hangzhou on Monday, despite new rules from the city’s local government that insist auctions cannot sell more than one property to the same buyer.
Since the city council set the restrictions, several parcels of land have already been auctioned off at high prices, some at several times the asking price. For example, the most expensive piece of land started at 12,900 yuan per square metre and went for more than 40,000 yuan.
“It doesn’t look like the recent restrictions set in place in Hangzhou have had much of an effect on the big players in the regional property market,” said a spokesperson at CTI China Renaissance in a phone interview.
“Obviously optimism is at a very high level and they are still prepared to fork out a hefty premium. They are betting against the new rules restricting house sales in the near future,” he added.
These super-charged housing bubbles in some of the country’s second tier cities has also affected some of their smaller satellite cities in the same regions. The domino effect has caused asset increases across the whole spectrum of residential housing and the price rises don’t discriminate between regular cities and business hubs.
Hangzhou has risen in prominence in the last few years due to the influx of medium and large tech firms relocating to the city, such as Alibaba. It also has the honour of hosting the 2016 Group of 20 meeting. Homes in the region have risen by over 20 percent on average compared to prices in 2015.
The article mentioned that at the current rate, all excess homes will be sold in the next 6 months.
