China's Astonishing Vacant Homes Crisis: Is There a Housing Bubble About to Burst?

China's population of 1.4 billion is insufficient to occupy the abundance of vacant apartments scattered throughout the country, as stated by a former official on Saturday. This public criticism of China's troubled property market is uncommon. Since 2021, China's property sector, which was formerly a cornerstone of the economy, has declined following the default of the major real estate company, China Evergrande Group, on its debt obligations after facing restrictions on new loans.

Big developers, including Country Garden Holdings, are still on the brink of default, which is negatively impacting the sentiments of home-buyers.

According to the latest data from the National Bureau of Statistics (NBS), as of the end of August, the total floor area of unsold homes reached 648 million square meters (7 billion square feet).

That would be equal to 7.2 million homes, according to Reuters calculations, based on the average home size of 90 square meters (970 square feet).

Residential buildings being built at Shanghai's Future City Hi Park residential project, developed by Sunac China Holdings Ltd., are seen in this photograph taken on Tuesday, November 8, 2022. Sunac, a Chinese developer, is collaborating with China International Capital Corp. on a strategy to expand all of its onshore bonds, as per sources familiar with the matter. The photograph was taken by Qilai Shen of Bloomberg via Getty Images.

Following Evergrande's example, Sunac, another prominent Chinese developer, seeks protection from bankruptcy in the US. Experts estimate that the majority of unused space consists of residential projects that were sold but remain unfinished due to financial difficulties, as well as vacant homes acquired by speculators during the 2016 market boom.

The number of vacant homes is highly disputed among experts. He Keng, an 81-year-old former deputy head of the statistics bureau, stated that the estimates vary greatly, with some experts believing that the current number of vacant homes could accommodate 3 billion people. However, He Keng believes that this estimate may be exaggerated and suggests that even with a population of 1.4 billion people, these homes would still remain unfilled. He made these remarks during a forum in the city of Dongguan, as reported by the official media China News Service.

The spokesman at the foreign ministry recently stated at a news conference that despite frequent predictions of China's economic collapse, it is important to note that such rhetoric has collapsed, not the actual Chinese economy. This statement contradicts the negative viewpoint expressed by him about the economically significant sector during a public forum, as it sharply contrasts with the official narrative that the Chinese economy is "resilient."