A plot of residential land in Shanghai

August 4 -- Residential land sales in China fell 10.4 percent year-on-year to 189 million square meters in the first seven months, while transactions of land for the development of commercial and office buildings increased 41.7 percent to 55.34 million square meters, reports Securities Daily, citing China Index Academy, an affiliate of property website Soufun.

According to Changjiang Securities analyst Su Xuejing, the enthusiasm of real estate developers for land purchases had waned due to uncertainty over the direction of government tightening measures.

With a related department hinting at a new round of tightening policies which may include further purchase restrictions, residential land transactions in July decreased 33.9 percent month-on-month and 37.2 percent year-on-year, while transactions of land for commercial and office building developments declined 47.3 percent month-on-month and 12.4 percent year-on-year.

The average premium of residential land transactions in the first seven months was 16.2 percent, less than half the amount recorded in the same period of 2010. The average premium of residential land in July fell to 9.7 percent, the lowest since March 2009.

The average premium of commercial land was 21.4 percent in July, 17.9 percentage points lower compared with the same period a year ago.

According to property website Homelink.com.cn, there was a 242 percent year-on-year surge in the number of unsold land plots nationwide to 353 plots in the first seven months, of which residential land plots accounted for 163 plots, or 46 percent of the total.

A total of 61 plots of land were not sold in July, equal to the total number of unsold land plots in January and February.

Developers had started to jointly purchase land in order to lower the risks involved.

According to Centaline Real Estate, nine major developers purchased a total of 100 plots of land in the first half, of which 54 plots have land areas of less than 100,000 square meters.

The trend of major developers buying smaller plots of land has increased the pressure on small and medium-sized developers, according to the report.

Shares of China Vanke (000002, 200002) dropped 0.36 percent to trade at 8.32 yuan at 10:39 today.