(Yicai Global) Nov. 23 --The city of Hangzhou in southeastern Zhejiang province has taken a number of measures to boost the auction of land use rights after tepid sales earlier in the year.

The local government has slashed the participation deposit, requiring a down payment of up to CNY50 million (USD7.8 million) instead of 20 percent of the asking price of plots, which can amount to hundreds of millions of Chinese yuan or tens of millions of US dollars, according to the Hangzhou Bureau of Planning and Natural Resources.

It has also lowered the starting price of some plots, raised the price cap on new homes built on the land and done away with the stipulation that only completed houses can be sold, which had not been popular with developers.

“By lifting the price ceiling, developers can make more money and it will help curb speculation,” a real estate insider told Yicai Global. “Previously the cap caused the price of pre-owned homes to be higher than new homes in the area. However, the high cost of a new property might put off first-time buyers,” he added.

Some 35 parcels of land for residential use covering an area of 4.2 square kilometers and with a total starting price of CNY71.3 billion (USD11 billion) will go under the hammer on Dec. 21. The municipality will be hoping to do better than in the previous action last month when only nine out of 31 plots sold at the asking price.

This time over half of the plots are in core urban areas. A number of leading real estate companies and state-backed firms have already signed up.

Editors: Tang Shihua, Kim Taylor