For years, land transfer fees have been an important source of fiscal revenue for local governments in China. However, the real estate market has been sluggish, resulting in consecutive annual declines in this revenue stream. According to the latest data, land transfer revenue in the first two months of this year has plummeted below 500 billion yuan, a 15.7% decrease compared to the same period last year. This marks a staggering 58% drop compared to the first two months of 2021 during the lockdown period.
On March 24, the Chinese Ministry of Finance released the financial situation for January and February 2025. The data shows that the revenue from the transfer of state-owned land use rights in local government funds for that period amounted to 474.4 billion yuan, a 15.7% decrease year-on-year.
Data from Zhongzhiyun shows that in January and February 2025, the planned construction area for land transactions of all types in 300 cities nationwide decreased by 4.5% compared to the same period.
Xie Yifeng, director of the China Urban Real Estate Research Institute, posted on March 25, stating that the national land sales revenue in the first two months of 2025 had dropped below 500 billion yuan, marking a drastic decline.
He provided a set of data on national land sales revenue from the first two months of 2021 to 2025, showing that in 2021, the revenue was 1.1236 trillion yuan, a 67.1% increase year-on-year; in 2022, it was 792.2 billion yuan, a 29.5% decrease year-on-year; in 2023, it was 562.7 billion yuan, a 29% decrease year-on-year; in 2024, it was 562.5 billion yuan, a 29% decrease year-on-year; and in 2025, it was 474.4 billion yuan, a 15.7% decrease year-on-year.
This indicates that the national land sales revenue in the first two months of 2025 plummeted by nearly 57.8% compared to the lockdown period in 2021; from 2022 to 2025, local government land sales revenue has seen a double-digit decline for four consecutive years.
Xie Yifeng pointed out that the significant drop in national land sales revenue in the first two months of 2025 is ultimately due to the seasonal off-peak period, slow project development and sales by real estate companies, decreased local land supply, and reduced land acquisition by real estate companies primarily due to debt and financing pressures, focusing on destocking.
Online commenters expressed their thoughts, with one stating, “The prices of houses in our community have halved directly.” Another commenter critiqued the reliance on land for revenue, questioning who ultimately bears the burden of profiting from land sales and the hardships that follow. There were concerns raised about the unsustainability of fiscal reliance on land and the oversaturation of the housing market leading to a surplus of supply over demand.
Some highlighted the negative impacts of land-focused financial strategies, with one commenter remarking, “Land is the primary method for exploiting wealth.” Concerns were also raised about the overextension of development for the past decade, a declining population, and the prospect of further consolidations of villages, towns, and provinces due to the ending of the era of excess and unchecked growth in the real estate sector.