Sustained weakness in the mainland property market has rattled local governments reliant on ever-diminishing income from land sales, Economic Information Daily reported Friday, citing data from research firm China Real Estate Information Corp.
Land sales in 10 major cities fell 24.6 percent year on year to 57.8 billion yuan (US$9.37 billion) in May, the first negative growth on a yearly basis in 20 months, the report said.
Centaline Property Agencyresearch also showed the per-unit price of land in first-tier cities falling 34 percent in May from April.
As a result, real estate developers have shown little interest in putting in bids for blocks, prompting cities like Wuhan, Shenyang, Changsha and Foshan to abort land auctions, the paper said.
In addition, local government tax revenues from property-related businesses shrank by 10.2 billion yuan in April from March, according to the report.
Wang Dehua, a senior researcher from the Chinese Academy of Social Sciences, was quoted as questioning the value of local government efforts to bolster the property market through administrative means, such as imposing a floor on price falls.
Wang said the authorities should diversify income sources and not rely just on land sales.
The 21st Century Business Herald also reported that many of the “land kings” of the property market’s heydays are struggling with weak prices and tight cash flows, forcing them to either leave land plots idle or cut prices sharply.
– Contact us at [email protected]