Critical have argued for years that China directed too many resources into real estate and housing. The country took on a lot of debt to boost real estate and allowed individuals easy access to real estate-related loans.
This article says that the problem is worse than many people realize. Among other things, it says about 20% of China’s housing is vacant and has few prospects of being filled soon. A counterargument is that China planned for its next stage of growth and urbanization and these housing units are ready as more people move from rural farms for better jobs.
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 survey data 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.”