The price of housing has dropped in the majority of China’s provinces for the first time in over six years as the government tries to tame a real estate bubble, sending debt-laden local authorities scrabbling to halt the decline, reports Nikkei. Sixteen out of 31 provincial-level divisions, which include cities directly administered by the central government, logged price declines in August, the most since March 2015.
As tax cuts aimed at stimulating the economy cut into revenue, cities have come to rely even more on land as a financial lifeline. But the central government’s curbs on real estate speculation threaten these flows.
The situation may be worse than the official figures suggest. Real estate developers, struggling to access capital, are rushing to unload inventories for quick cash. Online rumors say properties from crisis-stricken China Evergrande Group and other developers are starting to sell at half the original price.
Land in China is subject to state or collective ownership, and local governments sell usage rights to property developers to build housing or commercial facilities. Income from such sales in 2020 was equivalent to more than half of the total tax revenue collected by central and local authorities.