Financial Wudaokou | A large number of cities can’t make ends meet…

1

Suddenly, a large number of cities’ finances are almost unable to make ends meet.

Because of the impact of masks, because of too much spending on nucleic acid testing, and because of shrinking income.

But the main reason is: the land, which accounts for a large portion of local finances, cannot be sold at a good price or cannot be sold.

According to data from the Ministry of Finance over the past decade,

Since 2017, the proportion of land use right transfer fees in China’s local government’s total revenue has been rising year by year, never falling below 30%.

Especially in the past two years, the dependence on land finance has reached its peak, accounting for more than 40%:

In 2020, land transfer fees accounted for 43.59% of local government finances;

In 2021, it accounted for 41.81%;

What’s the concept?

This means that local finances almost entirely rely on land sales revenue, and the land sales revenue in various places has tightly grasped the lifeline of local finances.

Unfortunately, as we all know, due to market conditions and real estate companies, the land sales situation across the country has been quite poor in the past year.

The sharp drop in land sales revenue and the sharp decrease in fiscal revenue are not surprising.

2

How bad was the land market in 2022? The total land transaction volume in the country was the lowest in nearly 10 years!

Let’s take a look at a set of full-year national land transaction data that has just been released:

In 2022, the planned construction area of land transactions nationwide was about 620 million square meters, a year-on-year decrease of 31%, reaching the lowest point in nearly 10 years;

In 2022, the land transfer fee revenue was about 3.4 trillion yuan, also a year-on-year decrease of 31%;

Among them, first-tier cities: down 19% year-on-year, second-tier cities: down 35%, and third- and fourth-tier cities down 31%.

As shown in the figure, this is the national land transaction situation from 2013 to 2022, nearly ten years.

The planned construction area of land launched nationwide in 2022 was the lowest in nearly ten years!

The planned construction area of land transactions nationwide in 2022 was the lowest in nearly ten years!

Specifically,

There are only 6 cities nationwide with land transfer fees of 10 billion yuan or more:

——Shanghai, Hangzhou, Beijing, Nanjing, Chengdu, Guangzhou.

There are only 4 cities nationwide with a transaction area of 10 million square meters or more:

——Shanghai, Hangzhou, Chengdu, Changsha.

There are only 2 cities with a higher average premium rate, exceeding 8%:

——Shenzhen, Hefei.

So you see, except for Shanghai, Hangzhou, Shenzhen, Chengdu, Hefei, and Beijing, the land market in the rest of the cities is not optimistic.

Especially in the north, except for Beijing, the north is heavily injured.

For example, Tianjin, Jinan, Qingdao, Shenyang, Changchun, Wuhan, Zhengzhou, etc., the land market throughout the year is extremely cold, and the premium land parcels account for less than 10%.

3

And some cities, how bad is it? No one wants the land at all.

A major effort to hold a land auction, organize a land promotion meeting, but many land parcels, still cannot be sold after being listed once, and still cannot be sold after being listed twice.

Look at this picture, this is the supply completion of the centralized land auctions in 22 cities throughout 2022.

1. Hefei, which performed the best: the completion rate of the supply plan ranked first in the country, and the average premium rate ranked second in the country.

Hefei has always been very good at controlling land. Even in the past, when the market was booming, land prices across the country soared, and various cities were frantically selling land to raise money, Hefei’s land supply has always been small, and the rhythm is well grasped.

This has led to the fact that from 2017 to 2021, the amount of land sales in Hefei’s main urban area has not been much, and the projects for sale have always been in short supply, and the property market has also been the most durable.

2. There are 4 cities that have overfulfilled their supply plans throughout the year: in addition to Hefei, there are also Wuxi, Xiamen, and Shanghai, with a supply completion rate of over 100%.**

3. The cities with the worst completion rate of the national supply plan in 2022:

Qingdao, with a supply completion rate of 46%;

Zhengzhou, with a supply completion rate of 38%;

Beijing, with a supply completion rate of 36%;

Jinan, Wuhan, with a supply completion rate of 35%;

Shenyang, with a supply completion rate of 25%;

Changchun, with a supply completion rate of 16%;

Chongqing, with a supply completion rate of 16%;

In addition, Tianjin and Changchun have surprisingly high failure rates, exceeding 33%, and more than one-third of the land has failed to be sold.

4

The most tragic Changchun, how tragic is it? They don’t even dare to list the land!

Let’s take a look at a set of data:

In 2022, Changchun launched a total of 5 land parcels, with a total area of 322,200 square meters, a planned construction area of 606,300 square meters, and a starting floor price of 3,613 yuan/square meter;

3 land parcels were actually traded, with a transaction area of 127,700 square meters, a transaction construction area of 250,000 square meters, a transaction floor price of 3,130 yuan/square meter, and land transfer fees of 780 million yuan;

What level is Changchun in the 22 cities with centralized land auctions nationwide?

The lowest land transfer fee for the whole year, and the only city with less than 1 billion yuan!

The lowest land supply and transaction volume for the whole year, and only 3 commercial and residential land parcels were sold in the centralized land auction!

The lowest transaction floor price, and the only city with a floor price of only 3,130 yuan/square meter!

The highest failure rate, as high as 40%!

This lineup, you taste it, you savor it.

Other cities hold at least a dozen or even dozens of land parcels in a centralized land auction. At worst, they will conduct a preliminary investigation. If there are really no real estate companies willing to buy the land parcels, it is also very common to hastily suspend and delist before the auction.

But to what extent did Changchun become cowardly?

Other cities hold at least a dozen or even dozens of land parcels in a centralized land auction, Changchun only listed 5 commercial and residential land parcels in the centralized land auction in a year, of which 3 were traded at the reserve price, and the remaining 2 were not sold due to no companies registering.

And these land parcels that no one wants to buy and failed to be sold are not in the suburbs, nor are the indicators not good enough. For example, the land in the Kuancheng Changxin area in the second batch can be reached by Metro Line 4 and Line 3. Within 3 kilometers, there are provincial key primary schools, municipal key middle schools, top three hospitals, Wanda Plaza, etc., but even so, no real estate companies are willing to buy.

More importantly, Changchun’s dependence on land finance is second to none in the country.

Let’s take a look at another set of data:

In 2020, Changchun’s land finance dependence reached 155%, second only to Foshan, ranking second in the country.

In this year, Changchun’s land sales revenue was 68.3 billion yuan, and the general public budget revenue was 44.04 billion yuan;

Let’s look back at these four years:

In 2019, Changchun sold 79 commercial and residential land parcels, with an area of 7.69 million square meters;

In 2020, 95 land parcels were sold, with an area of 8.15 million square meters;

In 2021, 112 land parcels were sold, with an area of 8.86 million square meters;

In 2022, 3 land parcels were sold, with an area of 127,700 square meters;

Now that the land cannot be sold, the money bag can only be empty.

5

A more cruel fact is:

——The real land market in various places is far colder than what the data shows.

Here, there is a key factor, which is local city investment.

In the past year, many cities also seemed to have listed a lot of land and sold a lot of land, but in fact, except for the local city investment to step in and provide a safety net, there were basically no other developers entering the market to acquire land.

This is the more appalling truth hidden under the data:

Because local city investment acquires land without development, it is meaningless.

If you don’t believe it, look:

In 2021, local state-owned assets acquired a total of 430 land parcels, and only 42 projects were put on the market, with a market entry rate of only 10%;

From January to October 2022, local state-owned assets acquired 580 land parcels, and only 8 projects were put on the market, with a market entry rate of only 1%;

Why don’t you acquire land and develop it?

Because the vast majority of city investment enters the market with a mission, in order to make the land market look more lively, in order to make the local fiscal revenue at least look good in terms of data, and more for…

Forget it, I won’t say more.