A fifth of China’s homes are empty. That’s 50 million apartments
Bloomberg News
08 November 2018
Photographer: Qilai Shen/Bloomberg
Chinese President Xi Jinping’s mantra that homes should be for living
in is falling on deaf ears, with tens of millions of apartments and
houses standing empty across the country.
Soon-to-be-published research will show roughly 22 percent of China’s
urban housing stock is unoccupied, according to Professor Gan Li, who
runs the main nationwide study. That adds up to more than 50 million
empty homes, he said.
The nightmare scenario for policy makers is that owners of unoccupied
dwellings rush to sell if cracks start appearing in the property
market, causing prices to spiral. The latest data, from a survey in
2017, also suggests Beijing’s efforts to curb property speculation --
considered by leaders a key threat to financial and social stability --
are coming up short.
“There’s no other single country with such a high vacancy rate,” said
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.”
One solution that the government could use is property or vacancy taxes
to try to counter the issue, but neither appears imminent and some
researchers, including Gan, say what actually counts as vacant could be
tricky to determine.
Thousands of researchers fanned out across 363 counties last year as
part of the China Household Finance Survey, which Gan runs at the
university. The vacancy rate, which excludes homes yet to be sold by
developers, was little changed from a 2013 reading of 22.4 percent, he
said by phone, adding that he was finalizing the data for its release.
The 2013 study showed 49 million vacant homes, and Gan puts that number now at “definitely more than 50 million units.”
Housing speculation has bedeviled China’s leaders for years, as some
cities and provinces tightened buying restrictions only to see money
flooding into other areas. Rampant price gains also mean millions of
people are shut out from the market, exacerbating inequality. Xi
famously said in October last year that “houses are built to be
inhabited, not for speculation.”
Holiday homes and the empty dwellings of migrants seeking work
elsewhere account for some of the deserted properties, but purchases
for investment are a key factor keeping the vacancy rate high,
according to Gan. That’s despite curbs across the country meant to
discourage buying of multiple dwellings.
There’s an economic cost to vacancies too because they’re a drag on
supply, which puts upward pressure on prices and crowds young buyers
out of the market, according to Kaiji Chen, who co-authored a Federal
Reserve Bank of St. Louis working paper called “The Great Housing Boom
of China.”
Gan believes the government plans to do its own, larger survey in the
next year or two. Alternative sources for estimates include State Grid
Corp. electricity data, which former senior official Chen Xiwen cited
this year for a 13 percent vacancy level in medium-to-large cities.
Last month, Qiu Baoxing, a former vice housing minister, said the rate
is 10 to 20 percent in Beijing, exceeding levels in countries with
vacancy taxes.
One example of a vacant home is a villa on the outskirts of Shanghai
that 27-year-old Natalie Feng’s parents bought for her. The two-story
residence was meant to be a weekend escape for the family of three. In
reality, it’s empty most of the time, and Feng says it’s too much
trouble to rent it out.
“For every weekend we spend there, we need to drive for an hour first, and clean up for half a day,” Feng said.
She joked that she sometimes wishes her parents hadn’t bought it for
her in the first place. That’s because any apartment she buys now would
count as a second home, which means she’d have to make a bigger down
payment.
— With assistance by Paul Panckhurst, Emma Dong, and Miaojung Lin
Notes:
1.
China's vacant properties include empty homes of migrants seeking work elsewhere.
2.
New condo units are seen as a good investment as historically, condo
prices rise a lot higher than interest earned by money left in the bank.
