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China's 1.4 billion population isn't enough to fill the country's empty homes, former official says
(www.businessinsider.com)
this post was submitted on 24 Sep 2023
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The problem with China’s real estate market is that it’s entirely built on false promises and leveraged debt.
The government provides cheap loans to citizens to buy homes they will never live. All in an effort to drive the country’s GDP… but eventually you will either:
This article has nothing to do with unhoused people, nor an overvalued housing market pushing out middle class buyers. The economics of the Chinese market are completely dissimilar from the western (US particularly) markets.
It’s entirely about how the Chinese government has an unsustainable market segment dedicated to building things that people don’t want or need… other than to have wealth on paper.
The CCP basically "encouraged" those with capital to park it in these massive make-work projects knowing full well that any real demand-based natural economic equilibrium wouldn't support that housing inventory. They pumped up their economic numbers using tools like this, but like all centrally managed economies they are running out of levers to pull. It's going to be ugly when this stuff all comes to a head.
How? A 65 million unit surplus is more or less in line with other countries: 65/1400 = 5%. At an average family household size of 3, that gives an aggregate household vacancy rate of (up to) 15% (ignoring, of course, that not everyone who owns a home has a family). This also ignores how things like second homes, vacation homes, and excess rural housing stock is counted (given that, y'know, China has had a massive rural-to-urban migration over the past few decades).
The US census reports a vacancy rate of about 10%, and even New York has a vacancy rate of 3%.