SHANGHAI — Land sales in China fell sharply in value last year, while half the country’s listed real estate developers saw a fall in net profits, and more than 10 percent lost money, Chinese media reported. It is further evidence of the pressures on China’s property sector, one of the main engines of the nation's growth over the past two decades, which has slowed significantly in the last three years — despite recent signs of a recovery and official hopes that it will stimulate the nation’s slowing economy.

Land sales fell in value by 21.6 percent last year to some $525 billion, according to figures from China’s Ministry of Finance. The sharpest fall, 23.6 per cent, came in more developed eastern China, home to most of the country’s major cities — while sales slowed by more than 50 percent in the northeastern city of Dalian, the northern region of Inner Mongolia, and the eastern city of Ningbo, the Xinhua news agency reported.

Land prices did rise slightly, by 3.9 percent for residential and 2.7 percent for commercial, partly due to the government tightening supply of land in cities that have large stocks of unsold property inventory. But the sales figures appear to confirm predictions that China is likely to face a continuing slowdown in new construction in the near future. Construction growth, not adjusted for inflation, fell to 0.9 percent last year, according to official statistics. This has had damaging effects not only on China’s commodity sector, which has seen a major fall in demand, but also on China’s local governments, which are estimated to have gained between 30 percent and 60 percent of their total income from land sales and the real estate sector over the past two decades.

The slowing property sector is seen as a factor in the rise in local government debt that has become a major headache for China's leaders. At the same time, China's central government also said recently that it would step in to restrict land sales in cities with large amounts of unsold inventory this year to prevent a further glut.

And though property sales and prices have risen in some of China’s bigger cities over the past year — with prices of newly built houses in China’s top 100 cities up 7.4 percent year-on-year in March, and as much as 57 percent in the southern city of Shenzhen — as the government has relaxed sales and loan restrictions, data released Tuesday made it clear that the country’s real estate developers, many of which made huge profits over much of the past decade, have still been affected by the overall slowdown. 

Of 59 listed real estate companies that have reported their full year results so far, 30 saw profits fall last year, according to Xinhua.  

A slowdown in house price growth in some areas of the country was one factor. While overall revenue actually rose 24.8 percent compared to the previous year, average net income was up just 9.4 percent, compared to 10.5 percent in 2014. Xinhua quoted experts as saying that many firms that have yet to report results are also expected to see declines.

The worst performer was Vantone, a major developer in Beijing, which made a loss of some $95 million. One of the better performers, CIFI Holdings, saw revenue rise 43 percent to 30.2 billion yuan (some $4.7 billion) — though its net profit was only up 12.1 percent.

CIFI President Lin Feng put the company's positive performance down to focusing on bigger cities, according to Xinhua. And experts say these cities  remain the most attractive to developers. Evergrande Real Estate, one of China's biggest developers, which focuses on major cities in southern Guangdong province, reported sales of some $31 billion for last year — and around $10 billion in the first three months of this year alone, more than double the figure for the same period last year.

But that may not be good news for the Chinese government, which is seeking to boost property sales particularly in smaller inland cities, which are believed to account for much of the 739 million square meters of new property in China that remained unsold as of the end of February. An estimated 60 percent of this was residential property, which some analysts say would be enough to house 90 million people.

Latest official data showed that while prices rose in 47 of China’s biggest cities between December and February, they continued to fall in another 37, while new investment in property nationally was up just 1.3 percent in the first eleven months of last year, its slowest rate since early 2009. 

And government policies aimed at boosting sales in smaller cities — including lower downpayment requirements, and cheaper loans — seem in practice to have fuelled the rapid growth in prices in major cities this year, which has led to warnings of a bubble. 

The government has recently taken measures to cool the market in such areas, clamping down on gray loans. But it remains to be seen how far this will dampen investor interest, which has been boosted by a loss of faith in China’s stock market since its spectacular slump last summer. And experts say redirecting investment to smaller cities may be a slow process, and could require significant government support and subsidies. 

HSBC estimated late last year that the slowdown in property investment growth — which expanded by just 1.3 percent year-on-year as of last December, compared to a growth rate of 10.5 percent in 2014 — could have shaved almost one percentage point off China’s GDP growth rate. China’s economy grew by 6.9 percent in 2015, down from 7.3 percent in 2014, and its slowest rate for a quarter of a century. And officials are reported to have said it could take six years to clear China’s property glut — even if new construction continues to slump.