Land sales by the Chinese government plummeted for a second month in a rapidly cooling real estate sector, as cash-strapped developers stayed on the sidelines, putting pressure on local authorities who rely on these auctions to obtain income.
The value of land sales nationwide fell 11.15% to 570.3 billion yuan ($ 89 billion) year-on-year, according to Reuters calculations from Finance Ministry data released on Friday, after plunging 17.5% in August.
The slump is due to stricter regulations on private developer loans since the summer of 2020 have increasingly eroded demand for land, after it hit a record last year.
Private developers have bought at least 120.8 billion yuan of land in a round of land auctions held by 22 major cities, down 80% from the first round in March-June, according to a Reuters analysis of public notices about sales.
The sale of land represents a fifth of the income of local governments.
A prolonged drop in sales could hurt fiscal finances and local investments as the Chinese economy slows further, while avoiding contagion risks from the highly indebted developer. China Evergrande Group.
“The credit environment has declined rapidly since June, and financing for developers has been especially difficult“, he pointed Lu Wenxi, chief analyst of the real estate agency Centaline.
Even developers who have managed to sell homes have to wait a long time before receiving funds from buyers, as it usually takes three to four months before mortgage loans are disbursed, he said. Lu.
Revenues from the government’s land sales rose 8.7% to 5.36 trillion yuan in the first nine months of 2021, data from the Ministry of Finance showed on Friday, slowing the 12.7% growth recorded between January and August.
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