Land sales plunge amid housing slowdown  

5月300城土地出让金骤降近四成 土地流拍频现

(ECNS) – A slowdown in property sales across many cities last month has sent a chill through China's real estate market.

According to the China Index Research Institute, in May, 300 cities saw a 45 percent decline from last year in the number of land sales, and a 38 percent decline in land revenue. Residential land sales had a 54 percent drop in the number of deals and a 56 percent drop in the total sales area.

Declining land revenues have squeezed local governments' finances. A study of 45 cities by Tospur, a real estate consulting firm, shows that six cities are overly reliant on land sales, with percentages ranging from 85.1 to 147.5 percent of their total revenue.

The problem is not limited to small cities, but has also extended to first and second-tier ones, such as Guangzhou, Nanjing and Shanghai.

However, Tospur's Zhang Hongwei said a decline in land sales isn't all bad, as it sends a warning to local governments that they shouldn't rely too much on the property market, and need to create more revenue channels.