1y ago

Even China's 1.4 billion population can't fill all its vacant homes, former official says

www.reuters.com Even China's 1.4 billion population can't fill all its vacant homes, former official says

China's property sector, once the pillar of the economy, has slumped since 2021 when real estate giant China Evergrande Group defaulted on its debt obligations following a clampdown on new borrowing.

Even China's population of 1.4 billion would not be enough to fill all the empty apartments littered across the country, a former official said on Saturday, in a rare public critique of the country's crisis-hit property market.

China's property sector, once the pillar of the economy, has slumped since 2021 when real estate giant China Evergrande Group (3333.HK) defaulted on its debt obligations following a clampdown on new borrowing.

Big-name developers such as Country Garden Holdings (2007.HK) continue to teeter close to default even to this day, keeping home-buyer sentiment depressed.

As of the end of August, the combined floor area of unsold homes stood at 648 million square metres (7 billion square feet), the latest data from the National Bureau of Statistics (NBS) show.

That would be equal to 7.2 million homes, according to Reuters calculations, based on the average home size of 90 square metres.

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Nah. China's urbanization rate is currently 65%. South Korea for comparison has 82% urbanization rate. So the Chinese have plenty more (say, a hundred million or so more) homes to build. The current difficulties are more to do with (i) loss of consumer confidence caused by the leadership's bad economic management, and (ii) the deliberate restriction of credit to developers because of the government's concerns about debt.
This analysis reminds me of the hoo-hah about China's "ghost cities" circa 2010. Those ghost cities ended up being filled up.
- There are still vast ghost cities in that country, so no they don't actually all fill up
  
  Sooo many empty or partially used shopping malls
  
  In China or the US?
  
  Haha both!
  I dunno which is worse. The ones in China were never used, just built and left to rot. Many in the US had some decades of glory, then ended up with the same fate.
  
  Enough of them filled up that even the press outlets that pushed the ghost cities narrative most aggressively, like Bloomberg, have run follow-up stories acknowledging it.
  Yes, some developments worked out and others didn't, but building out housing in advance of increasing urbanization is a good thing, not a bad thing. It's how you avoid housing unaffordability in urban centers, or worse, the rise of slums.
  
  Building housing 15 or 20 years ahead of time isn't a good thing. When people move in, the places are already old. Apartment buildings deteriorate over time even with no one living in them. It's clearly wasteful to build them that early and there's definitely a huge property bubble in China.
  
  It's not 15 or 20 years ahead of time, though. The "ghost cities" came alive within only a few years; for example, this page points to Zhengdong New District, which was singled out as a ghost city by 60 Minutes in 2013. It had a population of 5 million seven years later. For district development (as opposed to constructing a single building), seven years is nothing.
  Coming back to their current property crisis: let's assume the article is correct that there's an excess of 7 million homes. We can plug this into China's current urbanization rate, and suppose China will get to South Korea's urbanization rate in 20 years (that's roughly how far they're behind SK, by GDP per capita). At one home for every 3.5 people, they need 3.4 million homes per year on average. So they have overshot by about 2 years, which is hardly going to make buildings crumble.
  
  Ghost cities are largely American propaganda and most have filled out to well urbanized areas. You can read quite a bit about it on the wiki
  
  Propaganda implies a concerted and deliberate effort. Even your source labels it as media misinformation stemming from gawking curtiosity.

117 comments