Factoids I’m reading about Chinese housing, haven’t verified but sound reasonable from other reading:
- 70-80% of household wealth is housing
- 25% of housing is vacant, held as investment
- housing prices +100% in past decade, principally in massive boom during 2015-19
https://www.globalpropertyguide.com/home-price-trends/China
- household debt/GDP more than doubled in past decade, to >60%
https://tradingeconomics.com/china/households-debt-to-gdp (in US, this fell from ~90% to ~80% in same period)
Traditionally housing was bought with cash (not much mortgages) but I think that’s been changing. All that household debt has to be for something. I’m not sure if Chinese mortgages are non-recourse. And even if you bought your condo for cash, losing 20% of its value still hurts.
Remember all the underwater homeowners in the US post-GFC? The CCP must be trying to figure out how to avoid a similar situation.
While reading about this, I learned that the rental market is pretty small compared to the US.
https://www.forbes.com/sites/wadeshepard/2019/10/29/china-now-has-an-answer-to-its-housing-crisisits-called-rent/?sh=5b6d40c01a60 Which reinforces how critical housing prices are to household wealth.