BEIJING (Reuters) – China’s government land sales slumped for a second month as demand from private developers further softened following tighter regulations on fresh borrowing, adding pressure on local authorities dependent on such auctions for income.
In September, the value of land sales nationwide fell 11.15% on year to 570.3 billion yuan ($89 billion), according to Reuters calculations of finance ministry data released on Friday. In August, sales sank 17.5%.
Land sales jumped to 8.4 trillion yuan in 2020 amid frenzied bids by developers. The record sales, the equivalent of Australia’s annual gross domestic product, bolstered fiscal budgets and stabilised local economies in a pandemic year.
At the same time, heightened concern over the indebtedness of developers such as China Evergrande Group led Beijing in August last year to introduce the so-called “three red lines” – financial requirements that developers must meet. Developers who fail to meet the rules will not be able to get new bank loans.
The tighter financing environment has cast a pall over the sector this year, with capital-starved real estate companies putting a pause on new projects and scaling back on purchases of land from local governments.
Revenue from government land sales rose 8.7% to 5.3634 trillion yuan in the first nine months of 2021, data from the finance ministry showed on Friday, slowing from 12.7% growth in January-August.
($1 = 6.3988 Chinese yuan)
(Reporting by Liangping Gao and Ryan Woo; Editing by Jacqueline Wong and Ana Nicolaci da Costa)
