Land costs seen surging in first-tier cities (2)

The recovery in home sales in the second half of this year boosted developers' cash flow, which enabled them to buy more land for future development, Li Zhanjun, head of research at E-house China R&D Institute, told the Global Times Thursday.

Local governments are under pressure to repay debts by the end of the year, which also explains why land sales are on the rise, Li said.

But it is too early to say that a new land rush is taking place and that housing prices will take off again, Liu Yuan, senior manager with Centaline China Property Research, told in Thursday.

The amount of spending on land by major property developers including Vanke and Poly Group accounts for 15.2 percent of their sales from January to October this year, down 4.8 percentage points from the same period of last year, Liu said.

This is far less than the figure in 2007 when property developers' spending on land was equivalent to 98 percent of sales, he said.

Many developers are still cautious about buying more land, given the continuing curbing policy, Liu said.

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