China's land sales slump for second month as developers stay away

China’s land sales slump for second month as developers stay away

For the second month in a row, China’s land sales slumped for an unfortunate reason as the demand from developers is continuously softening due to stricter regulations on fresh debts, which is putting additional stress on local authorities. Moreover, they are heavily dependent on such auctions for income. 

Nationwide, the valuation of land slipped by 11.5 per cent to yuan 570.3 million (USD 89 billion). Notably, the sales plunged by 17.5 per cent. 

For the local governments, the land sales account for almost one-fifth of the overall revenue accumulated by them for community welfare every year. 

Meanwhile, the additional extension would put a massive strain on their investments and finances. 

Land sales climbed to 8.4 trillion yuan the last year amid crazy bids by developers. In the pandemic year, the record-breaking sales, equivalent to the annual GDP of Australia, catapulted fiscal budgets. It stabilised local economies. 

Simultaneously, the huge concern over the indebtedness of several property developers like China Evergrande Group. 

The tight financing environment has scripted doom for investors and developers alike. As a result, the capital-starved companies have stalled their several projects during these times. 

They scaled back by purchasing government lands. However, that did not help. Before receiving the funds from purchasers, they had to wait for months. 

The income from land sales of the government hiked to 8.7 per cent from 5.3634 trillion yuan. The data released by the Finance Ministry exhibited it on Friday. It slowed down the growth from 12.7 per cent. 

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