Why China’s Property Crisis is Still Getting Worse

Following CCP's unsuccessful attempt to save the Chinese housing market, the property prices continue to fall and now stand at nearly 8% YoY. So, in this video, we're taking a look at what is driving this slump, and whether it could get better anytime soon.

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[TLDRnewsGLOBAL]

CORRECTION: At 1:33, when we show a graph comparing house prices to incomes across various cities. On the Y-axis, there are percentages after the units, when there should in fact be multiples. Apologies for this error, and we hope you nonetheless enjoy the vid!

[nicolasbenson]

fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.

[chrishekman]

I hate the fact that most economies are set up in a way where house prices falling is a crisis

[rudolfespinola]

Falling property prices should happen and it's a healthy development. Bubbles should not be kept inflated for ever.

[isimerias]

Step 1. Invest in property for speculation and personal wealth purposes in a country with a falling population and no immigration
Step 2. ????
Step 3. Profit?

[oltedders]

15 cities in China stopped publishing realized prices on 2nd hand homes because they are so far below state mandated values.

[dulio]

The Hukou system pretty much boils down to "Be poor in your home town or be a slave in a city, " which pretty much warps the calculus for buying a home.

[J_X]

The cost of housing in Shanghai is over 40 times the average income of the city.

Keep that in mind when you consider rising or falling prices.

[wdqmhll]

"Moral hazard" is only ever thought of when regular people might get debt forgiveness. There's never a moral hazard for bailing out banks, corporations, and the rich. Debt jubilees were common and regular all throughout history until the enlightenment. The late, great David Graeber has much to say about this in his book _Debt: The First 5, 000 Years._

[fakeskyler]

Thumbnail lookin like one of those "China WILL explode in 10 DAYS!" videos

[Lias_Louisiana]

I swear every time I see one of these videos I think "Why does TLDR upload at 3 AM?" Then I remember how timezones work.

[albevanhanoy]

Confused Europeans looking at China: "Wait... You are in a crisis because your home prices are *falling*

[Elina_H]

It's definitely alarming to hear about a default cycle, especially in the context of the housing market. Defaults can lead to foreclosures, and that has a cascading effect on the overall real estate landscape.

[danielalonso-jzxf]

If you are not in the financial market right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you...prevent inflation

[zmojofoot]

Notice that the Chinese government isn't bailing out these developers

[erozionzeall]

falling rent and house prices are a good thing actually

[cherylhills]

The economic crisis is really worrying, especially with everything going on in the global economy.

[Tai-Xian]

Your interpretation of the house price change chart was wrong. Any period where the change is above zero, prices are still growing, so it's only been falling in the negative region, or a little longer if you break apart the yoy number into mom numbers

[windwakerrules]

oh no cheap property, its so much better having your population on the streets.

[bikkiikun]

The core of the problem that caused the crisis is not goeing away... Mind you, you can easily find cheaper houses in downtown Tokyo, than in third tier regional cities that no one has ever heard of.
Add to that the fact, that you don't actually own property in China you own a lease, or more precisely whatever is left of the initial 70 year lease granted to the developer. Meaning, by the time you retire, your "property" is all but worthless, and there's nothing left for your kid to inherit. And that still doesn't take into account the poor quality of the building. There'll be deep cracks within a year or two, and it's turning into a deathtrap after a decade.
The problem is of course, that there is nothing else for Chinese people to invest into. Banks are not trustworthy, they'll just take your money away. You can't have too much cash, or the police will take it away. Stocks are too volatile in China. Foreign investments all but unobtainable for 99% of the people. What remains, is the domestic housing market. Thus everyone "invests" into that.