On July 22, 2024, data from the finance department revealed significant trends and shifts in national land sale revenue. This report analyzes the data, examining the underlying causes and implications of these changes.
1. Overview of 2024 First-Half Revenue
In the first half of 2024, national revenue from the transfer of state-owned land use rights was 1.5263 trillion yuan, marking a year-on-year decrease of 18.3%. This decline has expanded by 4.3% compared to the previous month. In stark contrast, the same period in 2021 saw a revenue of 3.4436 trillion yuan, a 22.4% increase from the previous year. The 2024 figures can be described as a cliff-like drop.
2. Key Statistics
Land Supply and Transactions:
- Planned construction area supplied: 700 million square meters (down 28.25% year-on-year).
- Total land transfer fees: 560 billion yuan (down 46.39% year-on-year).
- Average transaction failure rate: 8.60% (down 0.36% year-on-year).
- Average premium rate: 2.82% (down 2.81% year-on-year).
- There are signs of the land market approaching the bottom as both premium and transaction failure rates have not further deteriorated significantly.The overall performance of the national land market mirrors the trends in the sales market, with downward pressure on sales impacting the land market.Real estate companies have reduced investment due to debt maturities, completion guarantees, and incomplete recovery of financing.
3. Factors Behind the Decline
Several key factors contribute to the current trends in the land market:
- Caution in Land Acquisition: Real estate companies are cautious about acquiring land, slowing down their pace and focusing on destocking, completion guarantees, and risk prevention.
- Installment Payments for Land Transfer Fees: Payments for land transfer fees are being made in installments, affecting immediate revenue figures.
- Decrease in Local Land Supply: Reduced local land supply, combined with transaction failures and transactions at reserve prices, has led to overall low land prices.
- Reduced Land Acquisition by Major Entities: Urban investment, state-owned enterprises, and central enterprises have reduced their land acquisitions.
4. Comparison with Previous Years
National General Public Budget Revenue:
- First half of 2024: 11.5913 trillion yuan (down 2.8% year-on-year).
- Expenditure: 13.6571 trillion yuan (up 2% year-on-year).
Historical Revenue Trends:
- 2019: 2.7706 trillion yuan
- 2020: 2.8129 trillion yuan
- 2021: 3.4436 trillion yuan
- 2022: 2.3622 trillion yuan
- 2023: 1.8687 trillion yuan
- 2024: 1.5263 trillion yuan
- 2019: -0.8%
- 2020: +5.2%
- 2021: +22.4%
- 2022: -31.4%
- 2023: -20.9%
- 2024: -18.3%
5. Revenue Distribution and Impact
- Proportion of Land Sale Revenue: In the first half of 2024, land sale revenue accounted for 13.16% of the national general public budget revenue and 23.16% of local general public budget revenue. Comparatively, these figures were significantly higher in previous years, indicating a sharp decline in reliance on land sale revenue.
- Real Estate-Related Taxes: Total revenue from five land and real estate-related taxes: 1.0328 trillion yuan in the first half of 2024. Comparatively, the figures for 2023 to 2020 were 1.8538 trillion yuan, 1.9216 trillion yuan, 2.0793 trillion yuan, and 1.9694 trillion yuan respectively. These taxes accounted for 10.97% of national tax revenue in the first half of 2024, compared to 8.74% to 13% in previous years.
- Total Real Estate Revenue: First half of 2024: 2.5591 trillion yuan. This accounts for 22.07% of the national general public budget revenue, 38.83% of local general public budget revenue, and 27.20% of national tax revenue.
6. Historical Perspective and Future Outlook
- Long-Term Revenue Trends: From 1999 to 2020, national land sale revenue accumulated to 58.9 trillion yuan, surpassing 67.6051 trillion yuan by 2021, reaching 74.2905 trillion yuan by 2022, and surpassing 80.0901 trillion yuan by 2023. Average annual land sale revenue over this period was 3.2036 trillion yuan.
- Revenue and Growth from 2011 to 2023: Revenue figures ranged from 3.3166 trillion yuan in 2011 to 8.7051 trillion yuan in 2021.Growth rates fluctuated, with significant increases in some years and notable declines in others.
- Importance of Land Sale Revenue: Land sale revenue has been a substantial source of off-budget revenue for local governments, supporting development, infrastructure, affordable housing, education, and water conservancy construction.From 2011 to 2023, the total land sale revenue was 70.7343 trillion yuan, with an average annual revenue of 5.4411 trillion yuan.
Conclusion
The analysis reveals significant trends and challenges in the national land sale revenue landscape. The cautious approach of real estate companies, reduced local land supply, and payment structures have all contributed to the decline in revenue. The data indicates that the land market has not yet stabilized, and the lowest point has not been reached. The historical context and long-term trends underscore the critical role of land sale revenue in supporting local government finances and development projects.
