Why housing in China is so unaffordable and attempts to fix it have failed (2024)

FAQs

Why is China housing so expensive? ›

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.

A healthy housing market is critical to China's economic growth and financial stability, but slowing home sales, driven by pandemic restrictions and demographic shifts, has unsettled both real estate developers and home buyers.

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.

The imbalance between supply and demand; resulted from of strong economic growth creating hundreds of thousands of new jobs (which increases demand for housing) and the insufficient construction of new housing units to provide enough supply to meet the demand.

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.

New-home prices in China's 70 biggest cities rose in each of the first four months of the year, reversing a yearlong slide during the height of Covid restrictions. But the nascent rebound is losing steam. Growth in housing prices slowed in April. And the recovery has not been evenly dispersed.

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.

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.

Much of the increase in inequality in China can be attributed to the widening rural-urban divide, particularly the differentials in rural-urban income. A household survey conducted in 1995 showed that the rural-urban income gap accounted for 35% of the overall inequality in China.

Foreign investors are not allowed to buy land in China. The land in China belongs to the state and the collectives.

Is China buying US real estate? ›

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.

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.

The cost of buying a home is drifting further out of financial reach for the average American, according to a report from Redfin. The real estate website analyzed homes that went on sale last year and found that only 21% of them were affordable, meaning that nearly 80% of homes were outside the typical buyer's budget.

The root cause of these broad-based price increases are imbalances in supply and demand. There are three primary reasons demand may outpace supply: supply shocks, increased money supply and consumer expectations.

As a result, there is a sizable shortage of new homes after more than a decade of under-building relative to population growth, according to a new analysis from Realtor.com released Wednesday. The gap between single-family home constructions and household formations grew to 6.5 million homes between 2012 and 2022.

What is minimum wage in China? Minimum Wages in China remained unchanged at 2590 CNY/Month (363.681 USD/Month) in 2023. The maximum rate of minimum wage for employees was 2480 CNY/Month and minimum was 690 CNY/Month. Data published Yearly by Ministry of Human Resources and Social Security.

China does not have a visa specifically for retirees. However, there are several avenues to long-term residency for people who want to retire in China. The most common option for retirees is to get a permanent resident visa.

Estimated number in China

Most expatriates living in China come from neighboring Asian nations. An estimate published in 2018 counted 600,000 people of other nations living in China, with 12% of those from the US; that means approximately 72,000 Americans living in China.

The government now provides affordable housing by subsidizing commercial housing purchases or by offering low-rent public (social) housing to middle- and low-income families. At the same time, it relies on the private commercial housing market to meet the needs of higher-income groups.

The direct impacts of a Chinese crisis in terms of losses incurred by foreign holders of Chinese loans or securities would therefore be limited. China's gross foreign debt was officially estimated at around $2,635 billion (USD), or 15.5% of GDP at the end of 2021.

Is there an oversupply of housing in China? ›

China's real estate oversupply would limit economic recovery

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.

The 2020–2022 Chinese property sector crisis is a current financial crisis sparked by the difficulties of Evergrande Group and other Chinese property developers in the wake of new Chinese regulations on these companies' debt limits.

Chinese property giant Evergrande, whose liabilities exceed $300bn (£228bn), failed to meet interest payments to international investors. That prompted Fitch, an agency that rates companies' financial risk, to declare Evergrande in default.

Local governments are sinking further into debt, but after years of talk, officials have yet to introduce a real estate tax.

Because of its unique export-dependent economic system, China's money supply policies vary from methods used by other nations. Two ways China manages its money supply is by controlling forex rates and printing currency. The PBOC can also control the money supply by changing the reserve ratio and the discount rate.

Assuming the government taps stimulus to stem such a crisis in the form of policy rate cuts and widening the fiscal deficit, the property slump would cause gross domestic product growth to slow to 2.9% in 2023 and 2.8% in 2024, the economists estimated.

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%.

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.

More specifically, research published in the Journal of Economic Modelling demonstrates that the Hukou system and absence of a fully functioning land market are two main drivers of rural-urban inequality.

In concrete terms, China lifted people out of poverty first and foremost by identifying and reducing the barriers preventing people from enriching themselves, rather than merely giving handouts—in short, by following the ancient adage, “Give a man a fish and you feed him for a day.

What percentage of American homes are owned by China? ›

How have Chinese and Canadian investments developed over time? The share of Chinese investors in the U.S. real estate market remained somewhat constant until 2018 when it hovered at around 15 percent, before dropping to 11 percent in 2019 and then six percent in 2021.

There are two major methods for foreigners to inherit the estate located in China, namely notarization and litigation. In the event that there is no dispute between successors over the estate, you may bring relevant documents for succession notarization at a Chinese notary public.

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.

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.

Canadian investors lead this pack, by a long shot, with nearly 9.4 million acres of U.S. land — more acreage than 44 of the top 50 foreign landowners combined, according to the report. (These people own the most land in America.)

The countries with the biggest debt burdens in relative terms were Djibouti and Angola, followed by the Maldives and Laos, which opened a debt-laden railway line to China last year. The President of the World Bank, David Malpass, has called the level of debt “unsustainable” that many countries once again hold.

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.

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.

According to worldpopulationreview.com, Hawaii is the most expensive state to live in, with its housing costing three times the national average. New York and California rank as the second and third most expensive states in which to live, respectively.

Will US housing costs go down? ›

Revised Housing Market Forecast

Although home prices are expected to improve in the second half of the year, the California median home price is projected to decrease by 5.6 percent to $776,600 in 2023, down from the median price of $822,300 recorded in 2022.

Food prices are expected to grow more slowly in 2023 than in 2022 but still at above historical-average rates. In 2023, all food prices are predicted to increase 6.2 percent, with a prediction interval of 4.9 to 7.5 percent.

Those price increases have been largely driven by essential goods and services: transportation, energy, housing and food.

Inflation is so high because many consumers are spending more money than they usually do, and because supply chain issues and global fuel shortages have lingered since the pandemic. That high demand and low supply have led to an increase in prices.

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.

There is a shortage of 7.3 million affordable and available rental homes for renters with extremely low incomes in the US, up 8 percent from 6.8 million in 2019. The lack of housing options for renters with extremely low incomes are driving the overall affordable housing shortage across the country.

A family of four estimated monthly costs are 2,021.2$ (14,401.0¥) without rent. A single person estimated monthly costs are 558.9$ (3,982.3¥) without rent. Cost of living in China is, on average, 49.7% lower than in United States. Rent in China is, on average, 65.5% lower than in United States.

The average price of a new house in China increased 4.1 per cent on an annual basis to 10,588 yuan (US$1533) per square metre in the first two months of 2023, the first rise in 11 months, according to data released by the National Bureau of Statistics of China on Wednesday.

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 does it cost to live comfortably in China? ›

Minimum Wages in China remained unchanged at 2590 CNY/Month (363.503 USD/Month) in 2023. The maximum rate of minimum wage for employees was 2480 CNY/Month and minimum was 690 CNY/Month.

Generally speaking, the price of consumer goods in the U.S. is lower than in China, but the price of service is higher. In other words, the U.S. has cheap manufactured goods, while the Chinese advantage falls on lower labor costs.

Lunch/Dinner/Supper - 20–80 yuan (3–12.5 USD) Rice and noodles are the main food staples in China and they often appear on the table for mid-day and evening meals. You can also order dishes and rice, which cost about 20–40 yuan per dish.

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.

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).

“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.

China's housing prices are constantly evolving, but, as of 2021, the average new urban dwelling unit in China costs 29.8 times the average income in the country. For comparison's sake, the average new urban dwelling unit In the United States costs 4.3 times the average income in the United States.

What is the average monthly salary in China in US dollars? ›

The average monthly pay in China is 29,300 Yuan (Chinese Yuan), which, using the exchange rate that was in effect in July 2021, is comparable to 4,534 USD (US dollars) in the United States.

You may be able to retire comfortably in China on your Social Security retirement benefit, pension or other retirement income. However, it can be difficult to get a visa without other income. You can estimate your retirement benefit amount with a Social Security calculator.

Credit Suisse found China's median wealth outpaced Europe's in its 2021 Global Wealth Report. The average Chinese citizen has a wealth of $26,752, around $60 more than the average European. Chinese wealth has surged in the past two decades, with median wealth per adult growing more than eight-fold.