China’s property market is at risk of an overcorrection, not oversupply

There is no risk of China’s property sector woes spreading into a financial crisis but there is a policy-induced housing crisis and restrictions must be further eased

The property market must be stabilised to restore public confidence and spur private consumption, so economic growth can reaccelerate.

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Weijian Shan

Weijian Shan is the executive chairman of PAG, a leading Asia-focused private equity firm.

Published: 5:30am, 3 Apr 2024Updated: 8:41am, 3 Apr 2024

A Chinese former official made headlines last September by saying that China had so many vacant homes that even its 1.4 billion population cannot hope to fill them all. Estimates suggested there were enough vacant properties to house as many as 3 billion people.

If true, China’s housing market is doomed. But, to paraphrase Mark Twain, reports of the market’s demise are an exaggeration.

According to the national statistics bureau, China has built 14.4 billion square metres (155 billion square feet) of saleable homes – excluding self-built homes such as in rural areas – over the past 30 years. In 2020, the per capita urban living space was 38.6 square metres, meaning that in three decades, China had built enough housing for 370 million people, just 40 per cent of its urban population of 920 million. How many empty homes can there be?

There are two signs of significant oversupply in residential markets, according to economist Gao Shanwen, who based his work on data from economies including Japan and the United States.