Government land sales in China have slumped for a second month amid myriad issues plaguing the country’s ailing property sector, reports Reuters. Cash-strapped developers are choosing to abstain from land purchases, heaping pressure on local authorities dependent on land sales for income.
The value of land sales nationwide fell 11.15% to RMB 570.3 billion ($89 billion) from a year earlier, according to Reuters calculations of finance ministry data released on Friday, after sinking 17.5% in August.
The slump comes as tighter regulations on borrowing by private developers since the summer of 2020 have increasingly eroded demand for land, after it reached a record high last year. Private developers have bought at least RMB 120.8 billion of land in an ongoing round of land auctions held by 22 major cities, down about 80% from the first round in March-June.
On average, land sales account for about a fifth of local government revenues. An extended sale slump could hurt local fiscal finances and investments as China’s economy further slows while fending off contagion risks from the highly-indebted developer China Evergrande Group.