According to a Chinese property think tank, the Beike Research Institute (BRI), China has about 50 million empty houses.
The South China Morning Post (SCMP) cited BRI’s warning in its study that “China does not lack homes, with plenty sitting empty, and such high vacancy is risky.”
It added, “Empty homes represent a large potential supply. When expectations for the housing market turn sour, a large chunk of empty homes will be put onto the market and could weigh further on the downward pressure on home prices.”
According to its report, China’s average vacancy rate is 12.1%. The figure is higher than most developed housing markets, 11.1% in the U.S., 9.8% in Australia, and 0.9% in the UK.
The South China Morning Post used data from noted economist Ren Zeping, formerly of the Development Research Center; there are about 400 million houses in China. So the 12.1% vacancy rate is equivalent to 50 million empty homes.
SCMP also cited London-based research and consultancy firm Capital Economics, which estimated that China had about 30 million unsold properties last year and about 100 million more houses sold but unoccupied.
Many of these empty houses are homes bought for speculation during the heated property market during the 2016-2018 period when people rushed to buy homes for investment.
Now homeowners of these houses struggle to find tenants or buyers due to the slowed-down housing market. One owner told SCMP they had not received a single inquiry for the year.
China’s real estate has been in crisis, and there is no sign of recovery, which threatens to have a substantial negative impact on the world’s second-largest economy.
Last month, credit rating agency Standard and Poor’s Global Ratings (S&P) stated that China’s real estate sales would decrease by about 30% this year, doubling the firm’s forecast.
According to China Index Academy, a real estate research firm, new housing sales shrank 27% in the year’s first half. In addition, July sales dropped 13% from June and 27% from a year ago across 100 major Chinese cities.
The property crisis also might deliver a hit to banks. Bloomberg reported that China’s banks might end up losing mortgages of $355 billion as confidence in the country’s real estate market plunges.