China land sale revenues could drop 30% under new housing rules

Goldman Sachs economists project that China’s recent overhaul of home-selling regulations will trigger a 30% drop in land sale revenues, exacerbating the financial strain on local governments. The new rules shift the industry away from the traditional presale model—where developers sell residences before completion—toward a mandate to offer completed properties.

Historically, presales and related mortgage disbursements covered approximately 40% of developers’ construction capital. By dismantling this dominant sales model, the regulations are expected to reduce developers’ near-term investment capacity by a similar margin, making it more difficult for cash-strapped firms to purchase land. This shift comes as China’s property sector has been in decline since 2021; land sales revenue already fell 30.8% year-on-year in the first seven months of 2026.

Analysts expect these changes to accelerate consolidation within the sector. While smaller private developers face significant pressure, state-backed firms with stronger balance sheets and access to cheaper financing may gain market share. Goldman Sachs estimates the downturn in land sale receipts could persist until 2027 or beyond, with revenues potentially falling as much as 90% from their mid-2021 peak.