The average land premium in 22 major cities on the mainland has hovered at around 20 per cent for four consecutive months this year – well above the 5 to 10 per cent range seen in 2024 – after local governments started to relax price ceilings, according to a report from the China Index Academy.
Analysts said this was an early sign of a potential recovery in the housing market, though structural challenges remain.
“The structural recovery in land transactions at the start of the year has injected fresh confidence into the market,” said Ma Qianli, a research director with property think tank China Real Estate Information Corporation (CRIC). As the momentum begins to spill over – and with continued progress on urban village redevelopment initiatives – the second half of 2025 could bring a more sustained and broad-based recovery for China’s housing sector, he said.
The surge in land premiums is a shift from just a few years ago, when credit tightening and a pullback among homebuyers triggered the country’s worst-ever property downturn. Depressed demand and government-imposed caps cast a further pall over auctions and bids during the Covid-19 pandemic.
Local governments, which historically relied on land transfer revenues for their fiscal stability, have struggled to revive the auction market as private developers grappled with liquidity issues.