{"id":165010,"date":"2025-08-24T14:14:01","date_gmt":"2025-08-24T14:14:01","guid":{"rendered":"https:\/\/teknomers.com\/en\/the-14-million-vacant-homes\/"},"modified":"2025-08-24T14:14:02","modified_gmt":"2025-08-24T14:14:02","slug":"the-14-million-vacant-homes","status":"publish","type":"post","link":"https:\/\/teknomers.com\/en\/the-14-million-vacant-homes\/","title":{"rendered":"The 14 million vacant homes."},"content":{"rendered":"\n

In May 2024, the New York Times<\/a> published a startling report revealing the depths of the \u00a0real estate crisis\u00a0 in China. The scale of the problem was staggering: there were \u00a0four million finished apartments\u00a0 lacking buyers, along with another ten million sold but still under construction. This significant oversupply mirrors a historical precedent set in Japan during its own economic downturn in the 1990s.<\/p>\n

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A year later, the situation in China has worsened.<\/p>\n

The Japanese Precedent<\/h2>\n

The inevitable comparison between the current \u00a0Chinese economy\u00a0 and Japan’s in the \u00a01990s\u00a0 stems from both countries grappling with the fallout of \u00a0inflated real estate bubbles\u00a0 created by erratic fiscal policies, excessive optimism, and challenging demographic trends. Japan enjoyed a housing boom that saw prices double relative to rents, fueled by first-time buyers, favorable tax policies, and financial deregulation.<\/p>\n

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This \u00a0illusion of wealth\u00a0 spurred consumption and employment in Japan, but as the population aged and fewer first-time buyers emerged, real estate values plunged. This initiated a \u00a0deflationary trap\u00a0 characterized by rising unemployment and declining birth rates.<\/p>\n

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The Japanese Solution<\/h2>\n

Japan’s political response, which leaned heavily on aggressive monetary and fiscal interventions, failed to address the issue’s root cause: a \u00a0chronic demographic crisis\u00a0 rather than a temporary one. This misguided approach exacerbated existing socio-economic imbalances, artificially inflated housing prices, delayed marriages, and inhibited birth rates.<\/p>\n

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Over time, Japan emerged from \u00a0deflation\u00a0, yet found itself ensnared in a cycle of \u00a0long-term inflation\u00a0. This was driven by increased labor costs due to workforce shortages, industrial stagnation, and a decline in global competitiveness, compounding the challenges posed by an aging population. What began as “lost decades” could potentially stretch into “lost centuries.”<\/p>\n

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The Chinese Challenge<\/h2>\n

Today, \u00a0China\u00a0 confronts an even more dire scenario. Rapid urbanization, stringent land sale policies, and local governments\u2019 fiscal dependence on real estate led to an inflation of housing prices to \u00a0unprecedented levels\u00a0. At its peak, the real estate sector accounted for \u00a0one-fourth of the national GDP\u00a0 and a significant portion of public revenue, representing around \u00a070% of household assets\u00a0\u2014in contrast to 50% in Japan in 1990.<\/p>\n

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When factoring in the price-to-income ratio, which was over twice that of Japan, and the housing investment that surged to \u00a01.5 times\u00a0 greater relative to GDP than Japan, the bursting of this bubble resulted in millions of unsold homes, abandoned construction projects, chronic overcapacity, and a \u00a0destruction of family wealth\u00a0 totalling the entire output of a year\u2019s national economy.<\/p>\n

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\n \"Residential
\n Residential Zone in Shanghai<\/span>\n <\/div>\n<\/p><\/div>\n

The Demographic Trap<\/h2>\n

While Japan experienced a decline in first-time buyers over \u00a040 years\u00a0, China’s predicament is exacerbated by its former \u00a0one-child policy\u00a0. Today, new homeowners typically enter the market between the ages of \u00a028-32\u00a0. That peak demographic reached its height in \u00a02019\u00a0, just prior to the bubble’s burst\u2014meaning there’s an absence of the secondary demand that Japan experienced in the 2000s.<\/p>\n

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Moreover, China\u2019s elderly population is set to grow startlingly fast; it will take just \u00a0two decades\u00a0 to reach what Japan achieved in \u00a028 years\u00a0. In addition, China\u2019s \u00a0low internal consumption\u00a0\u2014only \u00a038% of GDP\u00a0 in 2020 compared to Japan\u2019s \u00a050%\u00a0 in 1990\u2014restricts the domestic demand necessary to cushion the crisis.<\/p>\n

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The Evergrande Case<\/h2>\n

The \u00a0Evergrande\u00a0 saga symbolizes the struggles of a once-booming real estate market, now trapped in a downward spiral for five years. Their staggering debts, peaking at \u00a0$360 billion\u00a0, forced them to withdraw from Hong Kong\u2019s stock market, showcasing the overall debt-laden reality of the sector.<\/p>\n

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At its zenith, Evergrande mismanaged its growth through aggressive debt accumulation. The government\u2019s \u00a0financial restrictions\u00a0 in 2020 precipitated its collapse, exposing the fragility inherent in a sector so reliant on speculation and easy credit.<\/p>\n

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\n \"Dalian,\n <\/div>\n<\/p><\/div>\n

Urbanization, Debt, and Speculation<\/h2>\n

The seeds of today\u2019s crisis were sewn back in \u00a01998\u00a0, when China liberalized its housing market amid a largely rural population. This policy change prompted an unprecedented urban migration of nearly \u00a0500 million people\u00a0, transforming real estate into the primary asset for Chinese families, which now represents \u00a080%\u00a0 of their wealth.<\/p>\n

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Between \u00a02000 and 2015\u00a0, housing prices skyrocketed by \u00a0sixfold\u00a0, fueled by speculative buying and a system allowing developers to pre-sell homes that were yet to be constructed. Simultaneously, local governments became increasingly reliant on land sales for revenue, thereby further inflating property values.<\/p>\n

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\n \"Construction\n <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n

The “Three Red Lines”<\/h2>\n

In a bid to stave off a financial cataclysm, the Chinese government introduced strict measures known as the \u00a0“three red lines”\u00a0 in 2020. These restrictions capped developers’ debt levels, limited liquidity, and curtailed mortgage offerings, starving companies reliant on credit and coinciding with the \u00a0Covid-19 pandemic\u00a0, which halted construction and diminished consumer demand.<\/p>\n

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The crisis officially began when Evergrande defaulted in \u00a02021\u00a0, a trend followed by companies like Country Garden and Sunac. The judicial system in Hong Kong has since ordered the liquidation of several major real estate firms, including \u00a0China South City Holdings\u00a0 as of August 2024, highlighting the structural weaknesses in the sector.<\/p>\n

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Price Drop and Excess Supply<\/h2>\n

The housing demand flattened in 2022; economic uncertainties and rising unemployment diminished consumer confidence. By August 2024, home prices experienced their steepest decline in \u00a0nine years\u00a0, while China now faces a staggering \u00a0400 million square meters\u00a0 of unsold properties, in addition to countless incomplete buildings.<\/p>\n

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Excessive family debt exacerbates the crisis, with mortgage burdens soaring to \u00a0145% of disposable income\u00a0 per person. As defaults rise, families are increasingly selling homes at a loss, further deepening the price decline and eroding buyer confidence.<\/p>\n

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Beijing’s Dilemma<\/h2>\n

The Chinese government is at a critical juncture. On one hand, it needs to support an industry employing over \u00a050 million workers\u00a0, while maintaining vital local government revenues and stabilizing the banking system. On the other, there is a pressing need to move beyond the \u00a0debt-driven growth model\u00a0 that triggered this crisis.<\/p>\n

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Despite promises from officials like Li Qiang to introduce new policies addressing home-buying flexibility in suburban regions, the scale of the challenge remains daunting. The enormity of the overdeveloped housing market makes any remedy seem more a damage-control effort rather than a sustainable solution.<\/p>\n

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\n \"Crisis\n <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n

A Stagnant Future<\/h2>\n

As historical contexts illustrate, Japan struggled for decades to recognize that its crisis was fundamentally demographic rather than financial. China now risks repeating this oversight, albeit with potentially more severe implications. With a \u00a0more inflated real estate bubble\u00a0, diminishing consumer demand, and an aging populace, China is entering a tumultuous period of \u00a0chronic vulnerability\u00a0.<\/p>\n

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Should the response involve merely short-term financial stimuli without tackling essential structural reforms regarding birth rates, welfare systems, and economic models, China could not only echo Japan’s \u00a0“lost decades”\u00a0 but also potentially sink into a protracted era of stagnation, undermining its global economic prospects.<\/p>\n

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As aptly summarized by sources at \u00a0Bloomberg\u00a0, the overarching concern may not be whether China can regain the dynamism of past decades, but whether it can innovate its economic structure to avert an \u00a0implosion\u00a0 that jeopardizes its social stability and government credibility.<\/p>\n

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Image | Pexels<\/a>, Kallerna<\/a>, Cephoto, Uwe Arana<\/a><\/p>\n

In Xataka | China is moving whole buildings at the same time to build underneath. Because? Because it can<\/p>\n

In Xataka | China wanted to turn a village into a great tourist resort. Did not have the numantine resistance of a neighbor.<\/p>\n


\n
General News – 2<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In May 2024, the New York Times published a startling report revealing the depths of the \u00a0real estate crisis\u00a0 in China. The scale of the problem was staggering: there were \u00a0four million finished apartments\u00a0 lacking buyers, along with another ten million sold but still under construction. This significant oversupply mirrors a historical precedent set in […]<\/p>\n","protected":false},"author":1,"featured_media":165011,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36399],"tags":[1856,679,15276],"class_list":["post-165010","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-homes","tag-million","tag-vacant"],"_links":{"self":[{"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/posts\/165010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/comments?post=165010"}],"version-history":[{"count":0,"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/posts\/165010\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/media\/165011"}],"wp:attachment":[{"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/media?parent=165010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/categories?post=165010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/teknomers.com\/en\/wp-json\/wp\/v2\/tags?post=165010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}