Economy in Turmoil: Real Estate Crisis Hits China
China, once considered the backbone of the economy, is facing an unprecedented downturn in its real estate sector. The country’s leading real estate giant, Eternity, recently defaulted on its debt payments, sending shockwaves through the industry. This alarming development comes in the wake of tightened lending regulations, which have left even established players like Country Garden Holdings struggling to meet their financial obligations. Consequently, this dire situation has eroded the confidence of prospective homebuyers, compounding the challenges faced by the industry.
According to data released by the Office for National Statistics, an astounding 648 million square metres of unsold residential space loomed over China as of August. To put this into perspective, considering an average house size of 90 square metres, this surplus equates to a staggering 7.2 million homes. It is important to note that this figure does not account for the completed but unsold homes, which might be attributed to cash flow issues or speculation during the buoyant 2016 market.
In an eye-opening video released by the China News Service, He Geng, an esteemed 81-year-old former deputy director of the Bureau of Statistics, revealed startling insights into the magnitude of the vacant housing crisis. Speaking at a conference in Guangdong province, He Geng explained that experts estimate the number of empty houses to be sufficient to accommodate a staggering 3 billion people. Considering China’s population of 1.4 billion, it is evident that filling these vacant spaces is an insurmountable challenge.
Moreover, He Geng expressed skepticism regarding the optimistic reports highlighting the amelioration of other key industrial sectors within China. Contrary to official claims of improvement, his assessment suggests that there are underlying issues that still pose significant obstacles to achieving overall economic stability.
These distressing developments within the real estate sector serve as a poignant reminder of the fragile state of China’s economy. As the aftershocks of Eternity’s default reverberate through the industry, it remains to be seen how the government and market players will collaborate to navigate this challenging landscape.
Reference: Reuters
Reuters news agency reported that thereal estateChina used to be the main pillar of the economy. It has been falling since 2021 when China Eternity Real estate giant Defaults on debt payment After newly managed lending Although big real estate developers like Country Garden Holdings is almost unable to pay on its debt to this day. As a result, home buyer confidence has decreased.
The latest data from the Office for National Statistics indicates that at the end of August. ChinaThere is a residential area. which has not yet been sold, totaling 648 million square metres. According to Reuters calculations Based on the average house size of 90 square metres, the area is expected to This equates to around 7.2 million homes This total does not include homes that have been sold but have not been completed again. Because there are cash flow problems Or is it a house that speculators bought during the 2016 bull market that is still vacant?
China News Service released a video in which He Geng, 81, former deputy director of the Bureau of Statistics, said at a conference in Dongguan, Guangdong province, that “different experts reveal different data on the number of empty houses. Most believe that the number the empty houses are enough for 3,000 million people, which may seem excessive. But China’s population of 1.4 billion cannot fill those homes.”
He also expressed his negative opinion on the key industrial sectors of the economy. This is contrary to official reports that China’s economy has improved.
Reference: Reuters
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