(Yicai Global) March 26 -- Guangzhou, the capital of southern Guangdong province, has become China’s first first-tier city to use a new centralized land sale system.

Under the new system introduced by the central government last month, 22 large cities will restrict land sales to three times a year and increase the number of plots on offer each time to help curb surging home prices. Previously, most sales were done in small batches and many times a year, giving financially robust firms the chance to drive up land prices, which in turn stoked higher property prices.

Guangzhou listed 48 plots of residential land for auction today, with the total amount reaching CNY90.1 billion (USD13.77 billion), according to information from the city’s government.

The number of plots for sale in Guangzhou’s suburban Zengcheng district accounts for the largest batch at 18, while those up for grabs in urban centers is relatively small, the authorities said. Guangzhou’s next two auctions in July and October will likely include more urban plots. 

The head of investment at a leading property developer told Yicai Global that his firm will pay close attention to popular lots. He expects developers to make more joint bids than ever before. It may be an opportunity for companies with few land reserves in Guangzhou to enter the outer suburbs at lower cost.

The cost of a new home in the city rose by 6.9 percent in February from a year earlier, a faster pace than in the other first-tier cities of Beijing, Shanghai and Shenzhen, and 10th nationwide, according to National Bureau of Statistics data. The month’s increase on January also placed Guangzhou at the head of its first-tier peers and third in the country.

Take for instance the most popular Tianhe East area, where the price of new homes was about CNY50,000 (USD7,640) per square meter last year, but have recently risen to between CNY65,000 and CNY80,000 per sqm.

Editors: Tang Shihua, Peter Thomas