• Monday, February 24, 2020

1 in 5 Homes in China Is Empty, Survey Finds

Discussion in 'China & Far East' started by Aepsilons, Jun 26, 2014.

  1. Aepsilons

    Aepsilons ELITE MEMBER

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    SHANGHAI—More than one in five homes in China's urban areas is vacant, and a current housing-price correction is putting additional pressure on the owners of such empty properties, according to a nationwide survey by researchers from China's Southwestern University of Finance and Economics.

    The vacancy rate of sold residential homes in urban areas reached 22.4% in 2013, or 49 million homes, up from 20.6% in 2011, according to the Survey and Research Center for China Household Finance, which conducted the analysis.

    The researchers surveyed households in 262 counties in 29 provinces, an expanded sample compared with 2011's survey of households in 80 counties.

    As of August 2013, the amount of outstanding mortgage loans on vacant homes in China reached 4.2 trillion yuan ($674.33 billion), the report added.

    The survey included homes left vacant by owners of multiple homes as well as those left empty by owners who have left the city to work elsewhere. In addition to the 49 million sold but vacant units, the survey estimated that China has 3.5 million homes that remain unsold.

    The survey said that vacant homes are more likely to add to homeowners' burden and cause them to suffer a financial loss. If home prices fall by 30%, 11.2% of the vacant homes would be underwater on their mortgages, compared with just 3.3% of occupied homes, it said.

    While most Chinese cities have shown only mild home-price declines so far, many analysts are concerned that sustained price falls could result in more homeowners holding mortgages that exceed the value of their homes.

    China is currently seeing a correction in its housing market, which is plagued by excess supply in many cities outside Beijing and Shanghai, and tightened credit. The country's property sector is an important driver of growth, with economists estimating that real estate and related industries, such as steel and cement, account for 16% to 25% of GDP.

    Analysts and investors have raised concerns about the massive rows of empty apartments in seemingly every Chinese city, the result of rapid development fueled by easy credit and authorities' desire for growth. A few analysts have also voiced the possibility of a painful correction if the bubble pops.

    In recent years, property developers have rushed into the market to build homes, which have been a popular investment as prices seemed bound to keep rising. But the allure has faded since late 2013, as prices began to stagnate and China lifted restrictions on individuals' investments in alternative channels. Many consumers are now investing in wealth-management products or in homes abroad, leaving property firms with hefty inventories to clear.

    Property firms cite China's still-low urbanization rate—54% in 2013—as reason to continue to build. But the survey pointed out that inventory levels are too high and demand for housing stemming from new urban residents would have only a limited impact on clearing inventory.

    An increase of 10 percentage points in the urbanization rate would result in only a 2.6% fall in vacancy rates, the survey said.

    Another property survey released last month by brokerage CLSA Research found that 15% of homes completed in the past five years, or 10.2 million units, are vacant. CLSA studied 609 projects across 12 cities in China, a sample that accounts for 20% of the country's GDP.


    http://online.wsj.com/articles/more...y-survey-says-1402484499?mod=wsj_nview_latest
     
  2. Aepsilons

    Aepsilons ELITE MEMBER

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    Very significant. 10 million units in only such a limited sample in this study. One can only imagine the entire spectrum across all of China.
     
  3. Luftwaffe

    Luftwaffe ELITE MEMBER

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    I would be willing to buy couple of entire buildings not just apartments.
     
  4. Aepsilons

    Aepsilons ELITE MEMBER

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    I've actually considered buying property in Guangzhou. Really great summer spot.
     
  5. Luftwaffe

    Luftwaffe ELITE MEMBER

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    Yeah but I don't know the complete rules & regulations of Chinese Gov and their Tax rates and anything else I don't want to be caught up in something that later I regret...I considered a couple of reasonable mansions in dubai but the rooms are very few [4-5 max] compared to the prices decided to look somewhere else for investment.
     
  6. Chinese-Dragon

    Chinese-Dragon RETIRED TTA

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    If you want to buy a second home in Guangzhou, you need to provide a 70% down-payment. :cheesy: Nearly the highest in the world.

    That is the Chinese government's method of preventing a bubble.

    Compare that to the US before the credit crunch, they not only required a 0% down-payment to buy a property, they even had something called "negative equity" which meant they loaned you more money on top of that!
     
  7. Hakan

    Hakan RETIRED MOD

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    Off topic :ashamed:

    The U.S Monetary base has increased over 500% since the year 2000. :o:

    U.S. National Debt Clock : Real Time
     
  8. Kesang

    Kesang FULL MEMBER

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    Yesterday I watched a documentary by vice. can you confirm these?
    VICE on HBO Season One: Corruption (Episode 6) - YouTube
     
  9. Aepsilons

    Aepsilons ELITE MEMBER

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    I'm looking at summer condo , actually. I've looked at some property in Shipai. :)

    US national debt is managable. Japan's national debt is actually worse , considering its comparison to the national GDP. :P

    Now is the time to buy property in China. Literally. :)
     
  10. itaskol

    itaskol FULL MEMBER

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    I have two homes in shanghai.
    one in center, where I live

    another one is about 40 kilometers far from the center. and it is empty all the time.I l stay there only 4-5 times in a years. for weekende holiday and barbecue.
     
  11. Hakan

    Hakan RETIRED MOD

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    Too bad in the end the average joe ends up footing the bill via higher taxes and inflation.


    [​IMG]

     
  12. Aepsilons

    Aepsilons ELITE MEMBER

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    How much does a condo cost in Shanghai? Just curious.
     
  13. Hakan

    Hakan RETIRED MOD

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    Yeah I saw that there are alot of ghost towns. Like people build up then sell it to an investor and the guy that bought it sells it again for a higher price to another investor.
     
  14. terranMarine

    terranMarine BANNED

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    40 km is quite far for barbecue haha
     
  15. Aepsilons

    Aepsilons ELITE MEMBER

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    It's rather unfortunate, bro!