50 million empty flats – a ticking time bomb in China’s housing market (2024)

FAQs

How many Chinese apartments are empty? ›

Fifty million empty flats threaten to plunge China's troubled property market further into crisis, warns think tank.

The property market faced severe downturns in 2022, with sales by floor area plunging more dramatically than ever before. This was largely due to the government's crackdown on debt-financed property, a policy that aimed to break China's addiction to debt.

If you look at land sales, Chinese real estate is in dire shape. As a result, there was a two trillion yuan ($290 billion) decline in income from land sales last year. And that drop continued into the first two months of 2023.

New home purchases in 40 major cities tracked by data provider China Index Holdings were 22% below pre-pandemic levels in 2019. Compared with last year, sales were up 25% — but that was mainly due to the low base of comparison with 2022, when Shanghai and other cities were in lockdown.

Ghost Cities are vacant neighborhoods and sometimes whole cities that were built but were never inhabited. Their existence is a physical manifestation of Chinese overdevelopment in real estate and the dependence on housing as an investment strategy.

By opting for such an aggressive urban development model and after massive quantities of debt-fueled construction, the country is now home to many uninhabited buildings and “ghost cities”, leaving the developers in insurmountable debt. While some of these “ghost neighbourhoods” found occupants later on.

Difficulties in the housing sector continued into 2022, when total sales decreased by 24.3% from 2021 and investment by real estate developers dropped by 10%. Although prices in first-tier cities, such as Beijing and Shenzhen recorded occasional gains, those of the second- and third-tier cities remain subdued.

The slower pace of home sales meant less cash flow for China's highly leveraged real estate developers, like Evergrande, setting the stage for credit defaults across the real estate and construction sectors. As the surviving developers were forced to deleverage, they halted construction on unfinished projects.

For all of 2023, S&P expects China developer sales to fall by about 3% to 5% — slightly better than the previously forecast 5% to 8% drop. This year's forecasts are based on expectations that sales in larger cities grow by about 3%, while sales in smaller cities don't drop by more than 10%, the report said.

In the last 10 years, Chinese investors have bought US$188.6 billion worth of property in the US – more than a fifth of total foreign investment.

Does China store 70% of its wealth in real estate? ›

In play now in China, where around 70% of household wealth is in property, this phenomenon is weighing on the post-pandemic recovery of household consumption, which Chinese policymakers have vowed to make a more prominent driver of economic growth.

Chinese investors are among the top foreign purchasers of residential real estate, along with Canadians, according to the National Association of Realtors. Other states have had concerns over foreign ownership of land and have made efforts to regulate it.

China had 3.5 billion square feet of finished but unsold apartments in February, according to Wind, a data provider. That is equivalent to around 4 million homes, according to some estimates.

As in Japan, China's property bubble was partly the result of financial liberalization which enabled property developers to rely on the shadow banking sector to raise funds with less scrutiny than they would have faced from banks and other regulated lenders.

BEIJING, June 1 (Reuters) - China's new home prices fell for the first time in four months in May and home sales slumped, according to a private survey, adding to pressure on a property market which is struggling to stabilize from a sharp slump.

1. Centralia, PA. An underground mine fire gone seriously wrong led to this modern ghost town northwest of Philadelphia. In 1962, a fire accidentally spread to the town's old, underground mines and created sinkholes that spewed smoke and toxic fumes across the community.

Ordos Kangbashi is often seen as one of the first and most prominent examples of the international Chinese ghost city phenomenon and fascination. Some journalists have pointed to the Ordos Kangbashi ghost city stories as an example of media hastily and often misinformed reporting of developments in China.

The term “ghost city” was first used by photographers and journalists documenting the Kangbashi District. Located in Ordos (Inner Mongolia), Kangbashi is one of the largest and most well known ghost cities.

Why is there global concern? China is the world's second-largest economy, with deep global trade and finance links. If the property crisis spreads to China's financial system, the shock would be felt far beyond its borders, analysts say.

For millennia, Chinese leaders instituted wall-building projects to protect the land from northern, nomadic invaders.

How many empty houses are there in China? ›

Watch | Gravitas: 50 million homes are empty in China

According to a report in the Telegraph, analysts have warned Beijing has adopted a "build, pause, demolish, repeat" policy as Chinese officials try to limit supply to prevent a drop in property prices and increase economic activity through additional construction.

In 2018, Chinese accounted for roughly 25% of foreign investment in the U.S. Residential real estate. In fact, Chinese investors have been the biggest buyers of U.S. residential properties for six consecutive years.

In 2021, the average price for residential real estate in Shenzhen was over 61.6 thousand yuan per square meter. This was the highest price among all major cities in China, with the average price across the country amounting to 16,533 yuan per square meter.

The answer is yes, foreigners are allowed to purchase property in China! The essential requirement is that you have studied or worked in China for at least one year on a residence permit. Foreigners are allowed to only own one residential property for dwelling purposes.

One-fifth of the homes in China — at least 65 million units — are empty. That amount of empty real estate is enough to house the population of France. The ghost cities are a testament to China's reliance on real estate as a driver of economic growth.

According to Insider, China had around 65million homes standing empty in 2020 - enough properties to house the population of France. But many experts can't put their finger on how many ghost cities currently exist in China.

In 2021, Business Insider, reported that in 2020 China had about 65 million empty homes.

China's property market has an oversupply of unsold apartments. In February, China had 3.5 billion square feet of completed but unsold apartments, equivalent to around four million homes, the worst oversupply since 2017.