According to data released by the Chinese Ministry of Finance, in 2024, the income from the transfer of state-owned land use rights in local government government funds of the Chinese Communist Party amounted to 4.87 trillion yuan, a decrease of 16% compared to the previous year. This marks the third consecutive year of double-digit decline since 2022.
In 2024, the income from land sales in the Chinese Communist authorities decreased by 16% compared to the previous year, marking the third consecutive year of double-digit decline since 2022, and the decrease in 2024 was greater than the 13.2% decrease in 2023. Compared to the peak in 2021, local land transfer income in 2024 decreased by approximately 3.8 trillion yuan.
National Bureau of Statistics data also shows that in 2024, national real estate development investment decreased by 10.6% compared to the previous year, the sales area of newly constructed commercial housing decreased by 12.9% compared to the previous year, and the funds in place for real estate development enterprises decreased by 17% compared to the previous year.
Experts at “First Finance and Economics” believe that the continuous decline in land revenue is mainly due to insufficient willingness of residents to buy houses and the tight funding situation of real estate developers, leading to a continued slump in the real estate and land markets, resulting in a simultaneous decrease in land transfer income. In addition, due to the economic downturn, the sluggish real estate market, tax reductions, and other factors, local tax revenues decreased last year. The consecutive decline in land transfer income has also reduced the financial resources available to local governments.
Lu Zhiheng, chief economist at Yuekai Securities, told “First Finance and Economics” that in the whole year of 2024, the cumulative decrease in land sales income compared to the peak in 2021 was 44.1%, approaching the cumulative decline in sales of commercial housing in the past three years. However, the rate of decline narrowed in the fourth quarter of last year.
However, several tax experts told “First Finance and Economics” that in the medium to long term, it is difficult for the land market to see a significant rebound, and the downward trend in land transfer income is unlikely to be reversed.
Regarding the situation of land sales income this year, Lu Zhiheng believes that in 2025, local governments are expected to see some improvement in the land market, and may support the land market through measures such as accelerating the supply of high-quality land parcels and activating existing land reserves. However, considering that the real estate sector is still in a period of adjustment and transition, land market transactions may continue to bottom out, and it is expected that national land transfer income will still show negative growth in 2025.
Lu Zhiheng believes, “The recovery of land transactions and real estate investment may be relatively slow, and there are still two unfavorable factors in 2025. On the one hand, the difficulty of developing existing idle land occupies business cash flow. On the other hand, the debt risks of individual large real estate enterprises have not been fully resolved, which will continue to constrain the confidence of enterprises in land acquisition.”