(Yicai) Jan. 27 -- The revenue that Chinese local governments raised from selling land-use rights declined by a double-digit percentage for the third consecutive year in 2024, mainly because of ongoing adjustments in the real estate market.

Chinese local governments' income from sales of land-use rights plunged 16 percent to CNY4.87 trillion (USD670.4 billion) last year from the year before, according to the latest data from the Ministry of Finance. The figure fell 13.2 percent in 2023 and 23 percent in 2022.

Chinese residents' insufficient willingness to purchase homes and property developers' overall financial strains have led to a continuous sluggishness in both the real estate and land markets.

Investment in real estate development in China dropped 10.6 percent last year from 2023, while the area of sold new commercial properties declined nearly 13 percent, and the amount of available funds at property developers sank 17 percent, according to data from the National Bureau of Statistics.

However, there was a noticeable rebound in the real estate market in terms of sales and land-use right transactions in the fourth quarter of last year, Luo Zhiheng, chief economist at Yuekai Securities, told Yicai. In the fourth quarter, local governments' income from land-use right sales fell 6.3 percent from a year earlier, compared with 24.6 percent in the first three quarters.

"In December, local governments' revenue from land sales rose 0.7 percent from a year earlier, marking the first growth of the year," Luo said. "Land prices in first-tier cities stopped falling, with floor prices for residential land transactions surging 29 percent, 79 percent, and 20 percent, respectively, in October, November, and December."

Local governments expect the land market to improve this year, as they prepare to increase the supply of high-quality plots and revitalize existing land resources, Luo noted. With the real estate sector still in the adjustment phase, the income from sales of land use rights will likely continue to decline, but at a single-digit percentage, he predicted.

Many regions are striving to stabilize the real estate market, and the government will also introduce stronger supportive policies, Yan Yuejin, deputy head of the Shanghai branch of the E-House China Research and Development Institute, told Yicai. This will improve the financial situation of property developers, leading to a relatively optimistic outlook for overall land transfer income this year, he added.

In fact, some new land plots were sold at high premiums in places like Hangzhou this month, indicating that some companies remain optimistic about real estate development investments, Yan noted.

However, under the popular belief that 'houses are for living in, not for speculation,' it is unlikely to see a significant rebound in the land market in the medium-to-long term, with the trend of declining land sales income unlikely to reverse, several fiscal experts previously told Yicai.

Editor: Futura Costaglione