comment 1

Urban China’s empty homes

China Evergrande Group has been in the news lately for being one of the most indebted property companies in the world. The company is now looking to raise some $5 billion by selling a stake in one of its business lines. That seems like a lot of money, but apparently it has upwards of $300 billion in liabilities. As I was reading about the company (in this WSJ article) I was surprised by some other stats about China’s housing market. According to some sources, nearly a third of the country’s GDP can now be tied back to real estate-related activities (see above chart). On top of this, about 21% of homes in urban China were thought to be vacant as of 2017. This equated to about 65 million empty homes. I don’t know what the exact numbers look like today, but these are staggering figures that speak to overbuilding.

Chart: WSJ

1 Comment so far

  1. Isn’t it just over-pricing or over-speculating, rather than over-building? If there are people who could benefit from newer or better housing, perhaps so they could live in urban areas where they could earn a better living, especially if they are currently peasant farmers without title to “their” land, aren’t they still under-housed? This is true even if the housing is priced too high for them to afford….for now.
    A Land Value Tax would bring land speculation to an end, and prices to realistic levels, while untaxing actual buildings would encourage more and of them and better use of land.

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