Can China Fix Its Housing Crisis? (2024)

FAQs

Can China Fix Its Housing Crisis? ›

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.

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.

To help solve the debt crisis among property developers, Beijing will set up a rescue fund of up to 300 billion yuan (US$44.3 billion), starting with 80 billion yuan. The money may be used to help developers complete unfinished projects, and purchase units which can be let out as rental housing.

A depressed housing sector poses grave concerns to China's overall economic outcome and local government finances, and, since early 2022, the government has taken measures to salvage the sector.

Chinese households have grown reluctant to purchase new homes in the past year, as the now-defunct Covid curbs, falling home prices and rising unemployment have discouraged would-be buyers.

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.

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.

China's grotesquely overinflated property bubble is at perpetual risk of bursting. A youth-unemployment crisis plagues its major cities. A perennially underpaid labor force is struggling to prop up consumer demand. And the demographic collapse wrought by the one-child policy has just begun.

The curves displaying their population trajectories over time have very different shapes. China's population is, in fact, already declining.

China Property Crisis Puts $1.6 Trillion of LGFV Debt at Risk - Bloomberg.

Does America have a housing crisis? ›

Studies have shown that for the past 40 years, housing supply has not kept pace with demand, resulting in a housing shortage ranging between 2 million and 6 million homes. Yet across America, a combination of recalcitrant homeowners and outdated zoning laws routinely block attempts to build more housing.

There are between 1.5 million and 6 million fewer homes in the U.S. than there are households ready to occupy them. The proximate cause of this mismatch isn't hard to discern: Over the past ten years, the number of housing units per 1,000 people in the U.S. has actually fallen.

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.

Because China is a socialist country, all land is either subject to government ownership or collective ownership. In principle, municipal land is subject to government ownership and land outside cities is subject to collective ownership. However, one can obtain the right to use the land.

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.

Down-payment requirements run as high as 80 per cent for big-city buyers, who save for years and tap parents for funds. That makes forced selling much rarer than in other countries, where downturns can push mortgages underwater, meaning the loan is worth more than the home.

The United States is the richest country in the world with the highest GDP, as of 2021. China is the second richest country in the world with a $17.734 trillion GDP.

The U.S. currently has the largest economy in the world by far with $23 trillion in 2021 GDP, according to the World Bank's data, while China has the second-largest GDP at $18 trillion and India the sixth-largest at $3 trillion.

China dominates every aspect of the bilateral economic relationship, as a net exporter, net creditor and net investor, despite Russia long being a richer country than China.

Who Is the Largest Landowner in the U.S.? The largest landowners in the United States are the Emmerson family, with 2,330,000 acres of land.

Can US citizens own land in China? ›

What are the Requirements to Purchase Property in China as a Foreigner? A foreigner must have studied or worked in China for at least one year before purchasing property there. A foreigner can only own one property in China, and that property must be residential.

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.

There is still much work to be done to propel China to the top of the world's economy, but it is certainly possible that the Chinese economy can surpass the power of the US by 2050. It may also be too early to make definitive projections of China's future.

Economic growth hit 5.9% in 2021 - the fastest rate in nearly four decades - as pandemic reopenings fuelled consumer spending and job growth. Companies also had it good, enjoying unusually strong profits, despite facing higher costs for supplies.

China has also benefited from the cheap Russian oil imports, and has stockpiled, curbing oil demand as a source of inflation. There is solace in the near absence of price pressures on the mainland too, given the moderation in economic growth and a rising domestic currency .

According to Policy Brief No. 153 from the United Nations Department of Economic and Social Affairs (UN DESA), entitled “India overtakes China as the world's most populous country”, between 2023 and 2050, the number of persons aged 65 or over is expected to nearly double in China and to increase by more than double in ...

By the end of April, India's population is expected to reach 1.425 billion, which means it will match and then surpass mainland China's population, the U.N.'s Department of Economic and Social Affairs (DESA) said. “China's population reached its peak size of 1.426 billion in 2022 and has started to fall.

Is the US on the road to a shrinking population like China? FREY: No, the US isn't dealing with a shrinking population like China. I think we're going to continue to have growth, but much slower growth. These last few years, the pandemic created very slow growth, almost flat growth.

At the end of 2021, of the 98 countries for whom data was available, Pakistan ($27.4 billion of external debt to China), Angola (22.0 billion), Ethiopia (7.4 billion), Kenya (7.4 billion) and Sri Lanka (7.2 billion) held the biggest debts to China.

However, this has declined over time, and as of 2022 they controlled approximately 25% of foreign-owned debt. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

Which countries owe the most debt to China? ›

An Associated Press analysis of a dozen countries most indebted to China — including Pakistan, Kenya, Zambia, Laos and Mongolia — found paying back that debt is consuming an ever-greater amount of the tax revenue needed to keep schools open, provide electricity and pay for food and fuel.

It's also worth noting that while foreclosure rates are up year-over-year, experts do not expect to see a wave of foreclosures in 2023, even where home values are depreciating, as many homeowners have substantial equity due to progressive home price appreciation in recent years.

Based on Zillow's data and CAR's data, the California housing market is expected to experience a slowdown in 2023 and 2024. According to Zillow, the average home value in California is $728,121, down 3.4% over the past year, and homes go pending in around 15 days.

As prices become unsustainable and interest rates rise, purchasers withdraw. Borrowers are discouraged from taking out loans when interest rates rise. On the other side, house construction will be affected as well; costs will rise, and the market supply of housing will shrink as a result.

While it's quite possible for median home prices to fall another 5% in 2024 – or a total potential drop of about 10% from the end of 2022 – if mortgage rates decline faster than predicted, that could mean home prices remain mostly flat through the end of 2024.

Sixteen million homes currently sit vacant across the U.S. In every state across the country, many homes remain empty while hundreds of thousands of Americans face homelessness.

Collapsing home prices from subprime mortgage defaults and risky investments on mortgage-backed securities burst the housing bubble in 2008. Real estate prices rose steadily in the United States for decades, with slowdowns caused only by interest rate changes along the way.

The cost of living in China can vary by location and type of purchase. On average, China's cost of living is 45% lower than the U.S according to Numbeo. Rent in China is 60% lower than the U.S. on average.

An average 80 square meter apartment within Shanghai's Inner Ring Road goes for upwards $886,000; while in the city's hinterlands it sells for around US$200,000. In Beijing, the average cost of a home of this size is roughly US$310,000.

How much is rent in China? Depends where you are but rent in a shared apartment can amount to 2,500 RMB to 3,500 RMB for a shared apartment in a Tier 1 city like Bejing or Shanghai. Additionally having your own studio can cost you around 4,000 RMB.

Is Texas banning China from buying land? ›

The Texas Senate on Wednesday gave final approval to a bill that limits the sale of Texas farmland to citizens and entities associated with China and several other countries.

“Owning” might not be the right term, as in China, property is simply leased for the duration of 70 years. After this time, the lease is usually renewed. However, the Ministry of Housing and Construction can theoretically nullify your lease at any time if your property is needed for development.

According to Russian law, foreigners are usually allowed to purchase or rent property in Russia, but certain exceptions apply. Also, in order to be allowed to buy a property, the foreign citizen must hold a valid Russian resident permit.

Overpopulation in China began after World War II in 1949, when Chinese families were encouraged to have as many children as possible in hopes of bringing more money to the country, building a better army, and producing more food.

Steps for Great Wall Protection

Although the Great Wall has sustained significant damage over the years, the Chinese government is now committed to preserving and repairing it. The “Great Wall Protection Ordinance” was implemented by the Chinese government in 2006.

China has become overpopulated due to many reasons, but the most plausible explanations are mostly because of food and water. Given that China has large areas of fertile land and good access to fresh water, it has the capacity to produce vast quantities of food to nourish large numbers of its people.

Today China is a country of homeowners with more than 90% of households owning homes (87% in urban and 96% in rural China) (Clark, Huang, & Yi, 2019). At the same time, more than 20% Chinese households own multiple homes, higher than many developed nations (Huang et al., 2020).

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.

China's real estate market has slumped in the last two years after Beijing cracked down on developers' high reliance on debt for growth. BEIJING — China needs to do more in order to fix its real estate problems, the International Monetary Fund said Friday.

What is happening in the Chinese real estate market? ›

China's housing market sales is regressing after a brief recovery, underscoring the challenges the world's second-largest economy is facing. Signs of weakness are emerging after housing sales and prices recovered briefly following a historical slump of about 18 months.

But mainly because property developers have run out of money. You might have heard of Evergrande. So they would go into smaller areas, pay top dollar for the land, then sell the condo projects before they're built. And usually, they would collect large down payments, usually 30%.

China's economy is set to rebound this year as mobility and activity pick up after the lifting of pandemic restrictions, providing a boost to the global economy.

Domestic ratings company China Chengxin International Credit Rating estimates the hidden debt of local governments was in a range of 52 trillion yuan to 58 trillion yuan at the end of 2022, about 1.5 to 1.7 times the amount of explicit debt.

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.

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

China's $23 Trillion Local Debt Crisis Threatens Xi's Economy - Bloomberg.

China Property Crisis Puts $1.6 Trillion of LGFV Debt at Risk - Bloomberg.

China Evergrande Group, the developer at the epicenter of the country's real estate crisis, has yet to reach an agreement with major creditors on a debt restructuring framework crucial to avoiding potential court-ordered asset liquidation, people familiar with the matter said.

Over 70% of China's wealth is tied up in real estate.

What year will China overtake the US economy? ›

The one sector where China continues to fall behind the United States is economic performance. This might be surprising since China is currently the second largest economy in the world and is poised to overtake the size of the US economy by 2050.

China's gross domestic product will surpass that of the U.S. in about 2035, the Goldman group led by Kevin Daly and Tadas Gedminas wrote, while India's GDP will narrowly surpass the U.S.' in about 2075.

Overall Outlook

In a best-case scenario, the U.S. will likely see a 'soft landing' with low/slow growth across 2023 before picking up in 2024. However, a downside scenario is a real possibility and could see the U.S. enter a prolonged recession lasting well into 2024, as is currently forecast for the UK and Germany.