- Local governments in China have withdrawn 206 plots of land from auctions since September.
- Demand among property developers for land has fallen due to tightening bank credit due to the Evergrande crisis.
- Home sales by value have dropped about 17% on-year in September.
The Evergrande debt crisis has hit land sales in China, prompting local governments to withdraw land from auctions in major cities.
Since September, local governments have withdrawn 206 plots of land from auction, the South China Morning Post reported. The withdrawn plots account for almost one-third of the 700 plots of land that were up for sale in 22 cities, according to the Hong Kong newspaper.
In capital city Beijing, 17 plots of land were sold last Wednesday — but there were 26 other plots with no bidders, according to local Chinese media.
In the business and financial hub of Shanghai, 20 plots of land were sold in the auctions last Monday to Wednesday. There were no buyers for seven plots, according to Chinese media reports.
The withdrawal of the land from local government auctions comes as banks are tightening lending to property developers in the wake of Evergrande’s debt crisis.
The episode has also hit risk appetite.
“Regulators’ property curbs and
strains caused by Evergrande are contributing to the growing reluctance of cash-strapped developers to acquire more land, slowing land sales in the primary market,” said Moody’s Investor Service late last month.
It’s a stark contrast to last year, when land sales grew 16% on-year to a record 8.4 trillion Chinese yuan ($1.3 trillion).
Homebuyers are holding back, too.
Home sales by value slid about 17% in September on-year, according to Bloomberg calculations based on government data. That’s after a drop of almost 20% in August.
The fallout from the Evergrande crisis is rippling across the entire Chinese society, sending millenials into an existential crisis and questioning if they would ever be able to afford to buy their own homes, Insider’s Cheryl Teh reported.
China’s economic growth has already been hit. The world’s second-largest economy’s third-quarter GDP growth hit a one-year low in 2021.