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A Fifth of China’s Homes Are Empty. That’s 50 Million Apartments

Discussion in 'The NF Café' started by mr_shadow, Nov 9, 2018.

  1. mr_shadow Minister of State Security Moderator

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    Chinese President Xi Jinping’s mantra that homes should be for living in is falling on deaf ears, with tens of millions of apartments and houses standing empty across the country.

    Soon-to-be-published research will show roughly 22 percent of China’s urban housing stock is unoccupied, according to Professor Gan Li, who runs the main nationwide study. That adds up to more than 50 million empty homes, he said.

    The nightmare scenario for policy makers is that owners of unoccupied dwellings rush to sell if cracks start appearing in the property market, causing prices to spiral. The latest data, from a survey in 2017, also suggests Beijing’s efforts to curb property speculation -- considered by leaders a key threat to financial and social stability -- are coming up short.

    “There’s no other single country with such a high vacancy rate,” said Gan, of Chengdu’s Southwestern University of Finance and Economics. “Should any crack emerge in the property market, the homes to be offloaded will hit China like a flood.”

    One solution that the government could use is property or vacancy taxes to try to counter the issue, but neither appears imminent and some researchers, including Gan, say what actually counts as vacant could be tricky to determine.

    Thousands of researchers fanned out across 363 counties last year as part of the China Household Finance Survey, which Gan runs at the university. The vacancy rate, which excludes homes yet to be sold by developers, was little changed from a 2013 reading of 22.4 percent, he said by phone, adding that he was finalizing the data for its release.

    The 2013 study showed 49 million vacant homes, and Gan puts that number now at “definitely more than 50 million units.”

    Housing speculation has bedeviled China’s leaders for years, as some cities and provinces tightened buying restrictions only to see money flooding into other areas. Rampant price gains also mean millions of people are shut out from the market, exacerbating inequality. Xi famously said in October last year that “houses are built to be inhabited, not for speculation.”

    Holiday homes and the empty dwellings of migrants seeking work elsewhere account for some of the deserted properties, but purchases for investment are a key factor keeping the vacancy rate high, according to Gan. That’s despite curbs across the country meant to discourage buying of multiple dwellings.

    There’s an economic cost to vacancies too because they’re a drag on supply, which puts upward pressure on prices and crowds young buyers out of the market, according to Kaiji Chen, who co-authored a Federal Reserve Bank of St. Louis working paper called “The Great Housing Boom of China.”

    Gan believes the government plans to do its own, larger survey in the next year or two. Alternative sources for estimates include State Grid Corp. electricity data, which former senior official Chen Xiwen cited this year for a 13 percent vacancy level in medium-to-large cities. Last month, Qiu Baoxing, a former vice housing minister, said the rate is 10 to 20 percent in Beijing, exceeding levels in countries with vacancy taxes.

    One example of a vacant home is a villa on the outskirts of Shanghai that 27-year-old Natalie Feng’s parents bought for her. The two-story residence was meant to be a weekend escape for the family of three. In reality, it’s empty most of the time, and Feng says it’s too much trouble to rent it out.

    “For every weekend we spend there, we need to drive for an hour first, and clean up for half a day,” Feng said.

    She joked that she sometimes wishes her parents hadn’t bought it for her in the first place. That’s because any apartment she buys now would count as a second home, which means she’d have to make a bigger down payment.

     
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  2. wibisana still newbie

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    Same here.housing kinda weak.
    Next door to my office is newly built apartment and it is "empty"

    Also i saw many empty newly built apartment. Prolly because we already have too much. Or the economy just bad. (Its been 3 yrs iirc since people kinda build a lot of high rise)
     
  3. mr_shadow Minister of State Security Moderator

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    Because I'm not a home owner yet, for me it would be "good" if the housing bubble collapsed so my wife and I could move to Shanghai (where her hukou nominally is).

    But since so many people's savings are invested in real estate it'd be unethical to root for a crisis.
     
  4. wibisana still newbie

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    I know things or two about cost to build a house (standard one) in here. Things that got marked up usually land price (it is so depended on demand. So something that should be cost like 5K (building materials) + 5K (land price) can be cost about 20-30K Because the land price instantly go up 3 folds and not to mention if the house is built by notable developer they have to pay a lot of indirect cost such as managers etc. If you build yourself you literally can save about 40-50%. Also developers usually have standarised profit of 60% (aside huge indirect cost)
     
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  5. zeroantizero Well-Known Member

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    An excess savings tax might make the market more liquid, and therefore help lower prices.
     
  6. makeoutparadise I will have my revenge

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    How much for a cheap one then
     
  7. Takano-san Brujo

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    China is like in my bottom 5 list of places to live along with Saudi Arabia, Nigeria, Iran, and Uganda. :camby
     
  8. wibisana still newbie

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    They'd pay big for foreign worker tho.
     
  9. mr_shadow Minister of State Security Moderator

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    The living standard in China is on par with that of Mexico or Bulgaria. The World Bank is likely to re-classify them as a "High Income Country" in the next one or two years.

    And that's just the average of the whole country. In the big coastal cities like Beijing and Shanghai the standard is like in Portugal or the Czech Republic.
     
  10. Takano-san Brujo

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    That is true, but if I'm going to move elsewhere, I am far too mouthy to live somewhere like China. I can manage in Canada. I think my top pick for a second homeland is Spain though, since Spain has some excellent freedom of expression and is basically socialist. :skully
     
  11. mr_shadow Minister of State Security Moderator

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  12. Takano-san Brujo

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    Again, it's mainly that I'd end up getting arrested for speaking out against totalitarianism. It's in my nature to question authority. :ano
     
  13. mr_shadow Minister of State Security Moderator

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    First of all the worst thing that can happen to a foreigner in China is that you get deported.

    Second of all I think you overestimate how much of your time you devote to thinking about politics. I think it's unlikely you'll be thinking about what a tyrant Xi is when you're singing karaoke, hiking in the mountains, or enjoying delicious Sichuan food. Or, you know, when you're just at work trying to pay your bills.

    The "authority" isn't visible every minute of every day.
     
  14. Alwaysmind 总是心神

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    Chinese buy real estateestate ououtside of China. Maybe one day I'll have a chalet in Shanghai.
     
  15. Blue Well-Known Member Supporting Staff

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    Uh

    You do realize that that collapse will be the End of China™ that I keep talking about? That's what's gonna make that 30 trillion dollar debt bubble pop. You are NOT going to want to move to Shanghai afterwards.
     
  16. mr_shadow Minister of State Security Moderator

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    You're neglecting that I'm not in China just to make a quick buck.
     
  17. Mider T VM Zombie

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    As an American, it's very odd for us to see empty buildings for such a long amount of time. Here in the states, if we see the odd Skyscraper that has no tenants for more than a few months it becomes a meme, however when you travel overseas it's so common in other countries that people don't bat an eye.
     
  18. wibisana still newbie

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    Well some developer build it not because they have orders but because they can
     
  19. Mider T VM Zombie

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    I think America is too privatized for that. The government isn't the one paying the construction company here, the contractor is.
     
  20. Blue Well-Known Member Supporting Staff

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  21. wibisana still newbie

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    Here too. The bank is paying and developers will be the one paying back in these kinda cases.

    Some higher rank in company able to push green light for the project.

    I was working for someone like that back then (before back to work for my uncle)

    I think our mall still 70-80% empty right now (we build it 5 yrs ago)
     
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  22. wibisana still newbie

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    There is difference between contractors and developer (owner)

    Tho something they are one company but in many cases they are 2.

    Developer basically who own it (pays, buy materials, sell it to people/final user)
    Contractor just the one who do building.
     
  23. mr_shadow Minister of State Security Moderator

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    Since China's population is due to peak in the 2030's, some of the national housing stock is obviously going to become redundant.

    But in the big cities that won't become apparent for years to come, as the people in Beijing and Shanghai who die without children will just be replaced by immigrants from the provinces. You'll only notice the housing surplus in places where nobody wants to live, that have no domestic immigration.

    (There are already "ghost villages" left behind after everyone there moved into the city but nobody bothered to demolish the buildings)
     
  24. Mider T VM Zombie

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    Its uncommon (as far I know) in the US for it not to just be one company. Cutting the middle man cuts costs so most buildings like malls and apartment complexes use the same developer and contractor. The only exception are buildings that are trying to impress with aesthetics like skyscraper HQs or something. They use world famous designs by world famous architect companies.
     
    Last edited: Nov 10, 2018
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  25. Avalon <img src=https://i.imgur.com/yfRnmmU.png>

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    I'm curious, your wife is Swedish like you or Chinese? :hm
     
  26. Mider T VM Zombie

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    She is Chinese and lives in Sweden. He is Swedish and lives in China.
     
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  27. Avalon <img src=https://i.imgur.com/yfRnmmU.png>

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    Wasn't expecting this, interesting.
     
  28. wibisana still newbie

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    That is why final buyerin here have to pay a lot more that it should be.
    Developers need profit while also putting burden (overhead cost) on the mall with salaries of managers etc.
    Contractor itself do take the job with requiring the developer to pay high (because contractor have their own managers to feed)

    This like this get build because managers in Developers feels urged to make profit without throurough market study. They put optimistic target and believe it will be sell out.
    Then they make proposal to BODs and get green lighted..

    Borrow money from bank and choose contractor to buy.

    After finish and they got the building. They cant sell it. (No buyers)
    Some went bankrupt and the mall belongs to the bank. Some can sustain some loses
     
  29. mr_shadow Minister of State Security Moderator

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    She's Chinese. Originally from province ("the Nebraska of China"), but now with a Shanghai hukou because her dad used to work there and pulled some strings to get her residency.

    We got married in 2014 and moved to Sweden together, but then one year later I got a Ph.D. position at the University of Hong Kong, so we've had a long-distance marriage for the past three years... (Of course with annual to semi-annual visits; she's coming over for Christmas this year).
     
  30. Avalon <img src=https://i.imgur.com/yfRnmmU.png>

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    I'm glad to hear that the long distance marriage is going well. :blobok
     
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