There are so many vacant houses in China that no one lives in the rent-free apartment for women in Northeast China | China Real Estate | Real Estate Crisis | Ghost Town

[The Epoch Times, April 24, 2024](Comprehensive report by Epoch Times reporter Xia Yu) In 2009, Bella Zhao exchanged an old rural homestead house and a small piece of farmland for five houses. Apartments and two shops. At the time she thought she had won the lottery. A few years later, when China’s real estate fell into a long-term crisis, she found that the “lottery ticket” could no longer be redeemed, and the apartment she owned was rent-free and unoccupied.

The Wall Street Journal reported on April 23 that real estate developers led by Wanda Group moved into sparsely populated, snow-covered villages in Jilin Province. Wanda plans to spend $2.8 billion to turn the area into a high-end resort with ski resorts, golf courses, hunting grounds and five-star hotels. Developers provide locals with new apartments in exchange for their old homes.

Bella Zhao, who was a teenager at the time, was to inherit the family’s old house in exchange for a new apartment.

Now, all five of Bella Zhao’s apartments are empty, and only one shop has tenants. The once-ambitious development stalled several years ago and the promised tourism boom never materialized. Ms. Zhao was so desperate that she offered to rent out the apartment for free as long as the tenants agreed to pay bills and management fees.

“But no one wants to live there, even for free,” she said. “Everyone who still lives in the town has their own property.”

The real estate industry plays a huge role in China’s economy, accounting for approximately 60% to 70% of Chinese household wealth. However, the industry has been in crisis in recent years. Well-known developers such as Evergrande and Country Garden have experienced explosions or defaults. Homebuyers have been depressed and property sales have dropped sharply.

According to the financial news “Barron’s”, there are currently millions of completed but unsold houses in China. One housing department official even said that there may be more than one billion units.

Joerg Wuttke, President of the EU Chamber of Commerce in China, was asked in an interview with CBS’s “60 Minutes” in February this year to estimate how many vacant houses there were in China. “There are 82 million people in the whole of Germany who can move here immediately, and at least 80 to 90 million apartments are empty and unfinished,” Kremlin replied.

Agence France-Presse published a report last July about the abandoned Guobin Building near Shenyang. Where luxury villas were originally built, the only residents are now cattle and the occasional explorer. The development was originally planned by Shanghai real estate developer Greenland Group and broke ground in 2010. But the project, known as the Guobin Building, was abandoned two years later. Today, these ramshackle estates remain abandoned, leaving rows of bizarre buildings that look like a construction cornfield.

“In fact, it’s all because of the corruption of the authorities,” a farmer surnamed Guo told AFP. “These (houses) could have been sold for millions of dollars, but the rich didn’t even buy one.” He explain.

Guobin Tower is just one of a number of abandoned developments scattered across China, an incident that illustrates the country’s growing real estate crisis. Agence France-Presse said that “ghost towns” such as the suspended residential areas near Shenyang have now become part of the Chinese landscape.

China’s real estate market has been in a slump for years. Initially, home prices remained resilient despite lower sales volumes. But by 2022, house prices in some of China’s most developed cities will begin to fall, wiping out a fifth of their market value, according to real estate agency Centaline Real Estate.

“When housing prices started to fall, I felt uneasy.” Ms. Zhao, 26, told Huari, “I felt like my life plan was disrupted.”

There has been little respite since then. New home sales among China’s 100 largest developers fell 47.5% in the first quarter compared with the same period last year and are currently near the lowest level on record. Existing home prices in China’s most developed cities fell 7.3% year-on-year in March, the worst drop since the government started releasing data in 2011.

These problems have also caused many in China’s middle class to lose confidence in the real estate market, further affecting demand and creating additional risks for China’s overall economy. According to Bloomberg, many citizens increase their wealth through real estate, with up to 70% of household assets stored in real estate. “For every 5% drop in housing prices, 19 trillion yuan ($2.7 trillion) in housing wealth will be lost,” the report said.

According to “Barron’s”, the worst places are lower-tier cities. The biggest problem they face is oversupply, where there are too many houses and too few potential buyers.

At the end of 2020, China’s real estate market began to shrink, and the deterioration in third- and fourth-tier cities accelerated. Buying slowed nationwide and oversupply began to intensify — most acutely in smaller cities.

S&P analysts said in a recent report that they expect sales in lower-tier cities to fall another 9% in 2024, even if sellers cut prices.

Editor in charge: Li Huanyu#