UPDATE 1-China's 2021 land sales slow sharply as property developers struggle

* Land sales +3.5% yr/yr in 2021 vs +3.8% in January-November

* Land sales +15.9% yr/yr in 2020 (Adds details, background, analyst quotes)

BEIJING, Jan 28 (Reuters) - Chinese government revenue from land sales climbed a mere 3.5% last year, a sharp slowdown as the country's property developers grapple with a liquidity crunch caused by regulatory efforts to rein in the sector's ballooning debt.

Revenue grew to 8.7 trillion yuan ($1.4 trillion), data from the finance ministry showed. The growth moderated from 3.8% for January-November, and compares with a 15.9% gain in 2020 and 11.4% in 2019.

Sentiment in the Chinese property market, which accounts for a quarter of GDP by some metrics, has been increasingly shaken by the liquidity crisis that has engulfed some of the country's biggest and most indebted developers.

State-controlled developers have stepped in to dominate land auctions as private firms stick to the sidelines, but even so sagging demand has pressured local governments to scramble for other income sources.

"We think state-owned developers may continue to dominate the land market in higher-tier cities in 2022, while private developers' acquisitions will remain muted, especially in the first half of 2022, as their funding conditions have yet to recover meaningfully," Fitch Ratings said in a report this week.

"Weaker new home sales will also weigh on developers' land replenishment. Fitch expects nationwide residential property sales to fall 10%-15% in 2022."

Average new home prices in China's 70 major cities declined 0.2% in December from a month earlier, according to Reuters calculations from data released by the National Bureau of Statistics (NBS), contracting for the third month. ($1 = 6.3595 Chinese yuan) (Reporting by Liangping Gao and Ryan Woo; Editing by Toby Chopra and Edwina Gibbs)