CRIC Real Estate: The average premium rate of land transactions in February reached 13.4%. The heating of land auction in the first half of the year is expected to continue.

Ke Rui Real Estate announced in a post that in February 2025, due to seasonal factors and inventory reduction targets, the land transaction area continued to decline month-on-month, but Beijing, Shanghai, and Hangzhou saw high premium transactions for multiple high-priced land parcels, leading to an increase in land transaction amount year-on-year. As of February 25, the average premium rate reached a new high of 13.4%, breaking through 10% for the first time since July 2021. With the acceleration of new housing sales in core cities and significant relief of local inventory pressure, combined with precise adjustment of land supply strategies in various regions, the investment willingness of real estate companies in high-quality land parcels continues to strengthen. Supply and demand: As of February 25, the land supply this month was 27.02 million square meters, a decrease of 22.6% month-on-month and 36% year-on-year. The land supply scale in February remained at a seasonal low level, with the supply scale maintaining a decline month-on-month. The transaction area was 22.83 million square meters, a decrease of 52% month-on-month and 6% year-on-year. The transaction amount was 91.7 billion yuan, an increase of 39% year-on-year. In terms of land transactions, as of February 25, a total of 22.83 million square meters of commercial land transactions were concluded in 300 cities nationwide, a decrease of 52% month-on-month and 6% year-on-year. Hangzhou and Xi'an had transaction areas exceeding 500,000 square meters, while Shanghai, Beijing, and Hangzhou had transaction amounts exceeding 10 billion yuan. Multiple high-priced and high-premium land parcels appeared in Shanghai, Hangzhou, Chengdu, and other cities. Due to the increasing proportion of transactions for high-quality land parcels in first and second-tier cities, the average floor price this month reached 4,019 yuan per square meter, an increase of 48% month-on-month. Market heat: The average premium rate of 13.4% increased by 4.7 percentage points compared to the previous month, reaching a new high. Shanghai, Hangzhou, Chengdu, Suzhou, and other cities saw many high-priced and high-premium land parcels sold, with six cities in the top 10 in terms of transaction amounts having an average premium rate of over 10%. Distribution: There was a clear differentiation in land transactions in cities of different levels, with transaction amounts in first and second-tier cities remaining stable on a month-on-month basis and increasing year-on-year, while third and fourth-tier cities saw declines both month-on-month and year-on-year. The transaction amount in first-tier cities this month was 30.4 billion yuan, a decrease of 4% month-on-month and an increase of 27% year-on-year. Future prospects: High-premium land transactions in Shanghai, Hangzhou, and other places are expected to continue in the first half of the year. In February 2025, high-premium land parcels were frequently seen in first and second-tier cities, while third and fourth-tier cities continued to have transactions mainly at the base price, highlighting the differentiation of market heat and the shift in investment logic for real estate companies. This also reflects the differences in the progress of stabilizing the market in various regions. Against the backdrop of real estate companies paying more attention to "profitability" and "safety," first and second-tier cities have adopted strategies of multiple rounds of high-quality land supply with reduced volume to improve quality, making high-quality residential land the top choice for low-risk allocation by leading real estate companies. The enthusiasm for land auctions further strengthens market expectations, creating a positive cycle. In the month, the State Council meeting clearly stated that it is necessary to dare to break conventions and launch tangible policy measures, with subsequent statements from the People's Bank of China, China Securities Regulatory Commission, and Ministry of Housing and Urban-Rural Development indicating that the focus of governance still lies in revitalizing existing land reserves and reducing inventory pressure. Cities like Beijing, Shanghai, Hangzhou, and Ningbo have declared in the month that they will further promote the improvement of high-quality residential areas. Considering the continued shrinking supply scale in February and beyond, it is expected that the supply and demand scale of the land market in the first half of 2025 will continue to remain at low levels. In terms of land auction heat, benefiting from the continuous improvement in the quality of newly supplied land, as well as demand-side expectations brought about by adjustments in regulation and planning, tax and fee reductions, and housing subsidies, core cities are expected to see more high-heat land parcel transactions. Coupled with positive feedback from demand-side indicators such as prices of second-hand homes, turnover rates, and transaction volumes, core cities are expected to continue the momentum of land auctions at the beginning of the year in the first half of 2025, helping accelerate the stabilization of the real estate industry. For third and fourth-tier cities, taking advantage of the policy window for local debt capacity expansion in 2025, it is recommended to continue to control the supply scale, focus on supply and demand adjustments in core areas, prioritize the revitalization of idle land in key areas, and change market expectations gradually to achieve a progressive stabilization.