Why China’s 48 Million Unbuilt Homes May Prolong Its Property Crisis

A report by Bloomberg Intelligence estimates that at least 48 million homes in China were sold before construction had been completed, suggesting the country's property crisis won’t be resolved anytime soon. Bloomberg Intelligence's Kristy Hung explains.
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[ylee]

In South Korea, new homes are pre sold but government agency will collect the funds and release them to developers based on progress. Additionally, the same agency provides housing insurance to buyers, so in case of developer defaults, the insurance covers the loss of buyers. For pre sold models, this kind of government intervention is essential.

[GhostOnTheHalfShell]

So what about completion? They have more housing than needed. And the *reason* for the boom is found in local government needs for revenue and demonstrating “growth”. Unless the impulse and need is fixed, governance will remain absurd in this area.

[catchsaurabhonline]

At the current pace it is going to take 8 years just to finish current homes. This is huge !!

[ylee]

Actually the worse problem is the “completed” but not occupied ghost homes. Estimates differ but some say such homes exceed 100 million units. Most such homes are sold and people carry mortgages on them. As the property market crashes nationwide, people who had “holding power” with extra cash, will give up. What will happen to the banks that hold such mortgages? Yes, this is 2008 US financial crisis times 10.

[abracadabra]

only if Chinese figured how to export their excess capacity in housing

[teebone]

We do so in the United States. We have not enough homes, but China is in crisis because they have too many homes.
Wow I prefer to have too many than not enough, which causes.

[milosnestorovic]

Massive, absolutely massive buildings and only buildings...

[ruifenghuang]

From 2019 to 2023, total price of home sold to square meter home constructed is 7813 rmb/meter square. Average housing price in China per square meter is above 9000 rmb/meter square over same time period. If there was significant extra houses sold than constructed the ratio should be way above housing price.

In 2023 China constructed 954 million square meter of houses, lowest since 2019. If there are 48 million homes, say 100 square meter per home (for 2/3 persons), it will take 4 years to finish them.

2020 consensus show living space per capita in China is 41 square meter, China has 200 million people to urbanize. So, 8.2 trillion square meter more houses to be built, at rate of 953 million square meter per year, it puts urbanization at 8.6 years.

[Bigjoe]

The biggest point really is construction worker wages and cost of construction - it has to go up in the future or the problem will NEVER get solved.. The China RE drag will be decade long...

[KtnM]

8 years add 2 more and u have a lost decade

[BruceJ]

At least China is addressing the issues, couldn't say the same about Murican homeless issue.

[glenwjohnson]

Seems like this whole housing situation isn't as bad as the media portrait bcus they've been saying this for the past 2yrs but everything is still calm in China.

[Whatisfun-fdin]

China may implement a policy that offers a free house for every child born;
This solves the problem of an ageing population and addresses the issue of housing surplus.
Don't underestimate the wisdom of Chinese people!

[lokesh]

With the Deflation you got the Less Costs for the Finish Building of Homes.

High Costs are responsible for the Unbuilt Homes.

The foresale of Homes with the view on Unchanged Costs made the Property Developers to be defaulted with the Price Hikes.

Necessary to say the Deflation is the Only Solution to resolve the Property Markets' 💹 Burden.

[Charles-qekc]

It's false the funding is acceleration the completion of some projects but obviously not all. You cannot spend trillions in one year just because you want to accelerate the completion of projects. This would seriously impact public finances thus you need a multi year package. That's exactly what they're doing now, the same is true for local government financial vehicles. The funding to reimburse the debt being transmitted to local governments but at such a scale that it will take a couple of years to completely resolve the issue. These are not stupid people.

[louistan]

First off; are the numbers correct or blue-sky. Second off; how much does Bloomberg truly know of the property market looking at it from the armchair.

[copaloadofthis]

It seems like Chinese 'Men' need to learn how to get their hands dirty, and start doing physical work for a change...

[meriliu]

Global Housing Property are like China! They borrow money from banks & money laundry it to somewhere!😂

[eddyr]

Interesting... more house home tha n the population can filled... that new right?

[muximuxicofficial]

Guys, don't you have anything better to report? This is nothing new