The government provides cheap loans to citizens to buy homes they will never live. All in an effort to drive the country’s GDP… but eventually you will either:

Run out of capital to fuel this construction
Rebase the value of these paper homes and the economy collapses on a scale 10x that of the 2008 housing crisis

This article has nothing to do with unhoused people, nor an overvalued housing market pushing out middle class buyers. The economics of the Chinese market are completely dissimilar from the western (US particularly) markets.

It’s entirely about how the Chinese government has an unsustainable market segment dedicated to building things that people don’t want or need… other than to have wealth on paper.

[–] clutch@lemmy.ml 6 points 1 year ago

The root cause that all comments here in Lemmy miss is the Chinese approach to tax funding, which is entirely built on cities and provinces being expected to generate tax income through land sales to property developers, and then public officials competency and rise inside the party being measured by the size of that tax income generated trough land sale.

China needs to adopt a western style of income and consumption taxation if they don't have one but I understand that internal enforcements is very lax (to prevent popular protests) and corruption (that ends up siphoning off any revenue raised through taxes).

In short, that housing stock will remain unused and, without maintenance and continued use, will only deteriorate over time, leaving cities with a terrible burdensome legacy

[–] mctoasterson@reddthat.com 3 points 1 year ago (1 children)

The CCP basically "encouraged" those with capital to park it in these massive make-work projects knowing full well that any real demand-based natural economic equilibrium wouldn't support that housing inventory. They pumped up their economic numbers using tools like this, but like all centrally managed economies they are running out of levers to pull. It's going to be ugly when this stuff all comes to a head.

[–] zephyreks@programming.dev 7 points 1 year ago

How? A 65 million unit surplus is more or less in line with other countries: 65/1400 = 5%. At an average family household size of 3, that gives an aggregate household vacancy rate of (up to) 15% (ignoring, of course, that not everyone who owns a home has a family). This also ignores how things like second homes, vacation homes, and excess rural housing stock is counted (given that, y'know, China has had a massive rural-to-urban migration over the past few decades).

The US census reports a vacancy rate of about 10%, and even New York has a vacancy rate of 3%.

Approximately 89.6 percent of the housing units in the United States in the second quarter 2023 were occupied and 10.4 percent were vacant.

[–] Jaytreeman@kbin.social 3 points 1 year ago* (last edited 1 year ago) (1 children)

Didn't we just come off a decade of record low interest rates? Are we all fucked?

[–] Icalasari@kbin.social 1 points 1 year ago

It's not a matter of if the Second Great Depression will happen, but when