China's real estate reckoning

CNBC's Eunice Yoon joins 'Squawk Box' from Beijing with a look at China's real estate sector.

[CameronFussner]

The fact that there is already an excessive amount of demand awaiting its absorption, despite how everyone is frightened and calling the crash, is another reason why it is less likely to occur that way. 2008 saw no one, at least not the broad public, making this forecast, as I'll explain below. The ownership rate was noted to have peaked in 2004 in the other comment. Having previously peaked in the second quarter of 2020, we are currently at the median level. Between 2008 and 2012, it dropped by 3%, and by the second quarter of 2020, it had dropped from 68 to 65.

[benevolent]

I visited China 6 months ago, and believe me, YES this ghost town thing is a real thing. I saw entire cities built in the middle of nowhere surrounded by farms, and looking like no one lives there. Also, my chinese gf's family all owns multiple vacant properties because it's just in the culture to own extra homes. They have homes worth 100k-200k USD equivalent and they make ZERO ROI on them, instead of throwing it into the SP500 and make 10.5%. That's how entrenched the manic bubble of home ownership has become in China.

[dixonpinfold]

Nantong's population is given as 7.7m, making it sound like an unheard-of metropolis, but this is for an extended area. Official sources give its metro population as ~2.5m.
Moreover, it nearly borders on Shanghai and is often called North Shanghai. Last year it was announced that the 3rd airport for serving Shanghai will be built there.

[lppoqql]

Good, just like Japan before any country that engages in real estate frenzy will have a crisis. I hope everyone learn not to prop up the real estate bubble. I'm looking at you Canada.

[jooky]

Move all the buildings to Canada and Australia!

[izgvvob]

2:38 That's a picture of Hong Kong, which has the exact opposite of the excess homes of "ghost cities" in China. Even with a recent decline in prices, Hong Kong apartments are still among the most expensive in the world, and the vacancy rate is among the lowest.

[MichaelChengSanJose]

Can’t fault the Chinese for being property crazy. With the capital controls, there’s literally no other investment option. You can’t invest in most stocks as companies are heavily controlled by the government. It’s better to take an empty condo than to have cash sit around earning nothing.

[TurnkeyTrading]

I have been hearing about China's economy and real estate crash for ten years.

[GK-qcry]

I wonder if I'd in the meantime waiting for a buyer the properties start to fall into disrepair which further decreases the selling price.

[williamhogarth]

USA is on the road to this as well. During covid all the bank loans for crap luxury building went from China to the US. GFC 2.0 won't be caused by subprime lending but luxury and office

[williamku]

How much of the US mutual fund monies are invested in those?

[luiscastillo]

a small village in China has 2 million people

[empcaligula]

This makes the 2009 financial crisis look mild. It took US over a decade to completely recover and there are still lingering effects. China’s property crisis seems catastrophic.

[david_dor]

Well at least we won't have to worry about that here in the USA anytime soon, lol.

[toram]

Cnbc should report the ones in USA too

[JustAlf]

The Chinese stock market is looking attractive, especially the tech sector. All these housing issues are not going to stop the Chinese people from using their versions of google, amazon, and Facebook on a daily basis. CQQQ

[sarcasmo]

It always seemed crazy they way they overbuild housing on such massive scale for decades.

[darylb]

They want 30 year olds to buy these places. I spoke with a doctor friend and she told me it takes like 30 years to make a 30 year old. They may need a flux capacitor to address this issue…

[ryanyep]

"you can't just build and they will come" the issue is that for a very long time you could build and they will BUY. Usually not to live in but as investment properties or a "secure" space to park their nest eggs, family savings, retirements, etc. The realization that most of this money is gone will be a hard one for many people in China

[robhappe]

It also means that a big part of savings is worthless