Tens of millions of empty flats in China are likely to become problematic for the troubled housing market, threatening to further undermine prices. “China does not lack homes, with plenty sitting empty, and such high vacancy is risky,” warned the Beike Research Institute (BRI), a Chinese property think tank, in its latest study. “Empty homes represent a large potential supply. When expectations for the housing market turn sour, a large proportion of empty homes will be put on the market and could weigh further on the downward pressure on home prices.” The average vacancy rate across mainland China is 12.1%, according to BRI’s report, released earlier this month. That compares with 11.1% in the U.S. and 9.8% in Australia, and is far higher than in the UK, where only 0.9% of houses are empty.
The rate translates to some 50 million unoccupied flats, if applied to a study last year by Economist Ren Zeping, formerly of the Development Research Center. By adding his estimate made in 2020 to official figures for the number of houses built to completion since then, there are about 400 million homes in mainland China. That number is roughly 16 times the total number of homes – both occupied and empty – in Hong Kong. Capital Economics, a research and consultancy firm based in London, would put the number far higher still. It estimated last year that mainland China had about 30 million unsold properties, while about 100 million more were likely to have been bought but not occupied. Homeowners across China may find it difficult to find buyers to acquire their empty units as the boom era in the housing market is ending.
“Some vacant houses are left over from the overheated period between 2016 to 2018 when people flocked to buy houses for investment,” said Sunshine Li, a real estate agent in Nanchang, the capital of Jiangxi province. About a fifth of the homes in Nanchang are unoccupied, putting it in first place among the 28 major cities that BRI monitored. The report, and in particular the ranking of cities, triggered fierce debate on social media. Nanchang residents responded angrily on Weibo, China’s equivalent of Twitter, declaring that they definitely do not have the most vacant homes. Whatever the discrepancies between individual cities, the fact that there are millions of homes gathering dust across the country is beyond doubt, the South China Morning Post reports.
S&P Global Ratings expects national property sales to fall by as much as a third from last year to between CNY12 trillion and CNY13 trillion in 2022, while average home prices could end up 7% lower. None of this bodes well for anyone wanting to offload their unused properties.