The real estate crisis in China is becoming worse and worse. According to reports, a campaign of destruction is intensifying throughout the nation. Indebted Chinese developers are in a crisis as the world’s second-largest economy suffers under the weight of a collapsing real estate industry. China now has large, deserted ‘ghost towns,’ and when construction workers run out of money, demolitions take place. This is the result of massive amounts of debt-fueled building.
The Telegraph reports that analysts have said Beijing has adopted a ‘build, stop, demolish, repeat’ program as Chinese policymakers attempt to control supply to avert a decline in real estate prices and promote economic activity through more development. The Chinese government is allegedly delaying construction on tower blocks and other buildings that could house 75 million people, or more than the total population of the UK, in a bid to rescue the country’s struggling real estate market.
The Telegraph stated that around three billion square meters of houses in China had been put on hold or destroyed recently, citing data by Fathom Consulting. According to News Track Live, there are millions of vacant residences on the Chinese mainland. The already unstable Chinese property market may face difficulties when prices decline even more as a result of the excess of unoccupied houses.
In its most recent study, the Chinese real estate research institute Bic Research Institute (BRI) cautioned that ‘such high vacancy is risky’ and that there is no shortage of homes in China that are vacant and unoccupied. A sizable number of vacant homes will be listed on the market when forecasts for the housing market turn negative, which may add to downward pressure on home prices, it added.
According to the earlier, this month published BRI study, the average vacancy rate on the Chinese mainland is 12.1%. Compared to the UK, where just 0.9% of homes are unoccupied, Australia, where 11.1% of homes are vacant, and the US, where 9.8% are vacant, this percentage is far higher. In research completed last year, Ren Zepping, a former economist at the Center for Development Research, calculated that number to be close to 50 million empty units. According to official data, China’s mainland is home to some 400 million dwellings.