This summer Price Tags wrote about the fact that 200 new measures meant to cool the housing market in China has had little impact. Bloomberg News reports that up to 22 percent of all China’s units are vacant, representing fifty million apartment units. Even the Chinese President has gone on record stating that homes should be for living. But real estate still has an allure in a country where home ownership was suppressed in the 20th century, and where young men raised under the One Child Policy buy units to raise their prospects of attracting a marriage.
When restrictions on housing speculation in certain cities and provinces were established, real estate capital went to places without the restrictions. Price increases have meant that many people are priced out of the market. Of course the fear is that the data about the empty units might spark a selling frenzy, sending property values crashing. Entire cities have been built anticipating future inhabitants and luring property investors. These largely uninhabited places are called “ghost cities”.
“There’s no other single country with such a high vacancy rate,” said Professor 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.”
A soon to be released study shows that a vacancy rate of 22.4 per cent in 2013 has not changed. This figure does not include the units held by developers still to be sold. From 2013 to 2018 an additional million units have been snapped up by buyers.
These vacant units put pressure on real estate prices and crowd first time buyers out of the market. China has considered a vacancy tax or a real estate tax, but there has been no take up on this kind of regulation. You can take a look at what a ghost city in China is like in the YouTube video below, and speculate whether this is a housing bubble and if it is, when it will burst.