At the heart of China’s growth miracle since 1990 has been a massive housing bubble which is just beginning its bust. Major crisis assured.

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Even China’s 1.4 billion population can’t fill all its vacant homes, former official says

  • Unsold, completed: ~7.2 million homes, according to Reuters calculations, based on the average home size of 90 square metres.
  • That does not count: the numerous residential projects that have already been sold but not yet completed due to cash-flow problems
  • or the multiple homes purchased by speculators in the last market upturn in 2016 that remain vacant
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China central-bank adviser proposes structural reforms to revive economy

Zhongzhi’s problems are the latest ripple effects from China’s property crisis, which is wreaking havoc in the country’s financial system and piling pressure on a central government navigating a troubling economic slump.

Logan Wright, director of China markets research at Rhodium Group, said China used to embrace bailouts, because faith in a government backstop allowed credit to flow for a fast-growing economy. But as China’s debts ballooned, the government changed course.

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“That strategy is now coming to an end,” he said.

 

h/t mark000