Revenue from land sales by local governments in China hit an eight-year low last month, another sign of a deepening housing crisis.

According to calculations based on data released by China's Ministry of Finance on Monday (May 20, 2024), local government revenue from the transfer of state-owned land use rights fell 21% year-on-year to 238.9 billion yuan in April, the lowest since May 2016.

Eric Zhu, an economist at Bloomberg Economics, said this, along with weak housing sales and investment data in April, further pointed to a deepening decline in the housing sector and increased the urgency for the government to step up support, while the government also did react.

A sharp decline in China's housing market and land sales has added to the financial pressure on local governments, which derive a large portion of their revenue from land sales. The Chinese government last week announced its strongest moves yet to shore up the struggling property market, including easing mortgage rules and providing tens of billions of dollars in support for local governments to buy unsold homes.

The question is how local officials will use the funds, the report said. Chinese Vice-Premier He Lifeng also pointed out at a meeting hosted by Chinese Vice Premier He Lifeng last Friday that local governments should proceed from actual conditions and properly dispose of transferred idle residential land through resumption, acquisition, etc., as appropriate, to help real estate companies with financial difficulties solve their difficulties.