China’s overhaul of home sales will worsen local government finances, driving a 30% decline in land sale revenues, Goldman Sachs Group Inc. economists said Monday. The estimate, revised from a previous 20% forecast by economist Lisheng Wang, aligns with Ministry of Finance data showing land sales revenue fell 30.8% to 1.2 trillion yuan ($179 billion) in the first seven months of the year.

The shift away from the presale model toward completed properties makes it harder for cash-strapped developers to acquire land. Goldman expects the downturn to persist until 2027 or beyond, with revenues potentially plunging 90% from the mid-2021 peak. The presale system, which let developers sell homes before completion, fueled excess supply and a developer debt crisis, sparking mortgage boycotts over unfinished projects.

Under the new model, developers collect only small deposits, and buyers can walk away if homes aren't delivered on time. The property slump coincides with broader economic weakness in July, including softening consumption and falling new-home prices, prompting Premier Li Qiang to call for stronger supportive measures.