2014-06-11

CHFS Estimate: China Has 50 Million Empty Homes Backed By ¥4.2 Trillion Debt

The latest research is from China Household Finance Survey and says that nationwide, empty homes make up more than 20% of the housing stock. Of these, the vast majority are investment properties. As this first chart shows, families with only one empty home have are responsible for about 5% of vacancies. People with multiple empty homes are responsible for the bulk of vacancies. Overall, the vacancy rate is very high and CHFS estimates there are ¥4.2 trillion in mortgages backing these empty homes. This sample was taken from 29 provinces, 262 counties, 1,048 communities, and the researchers believe it is statistically significant.


A comparison by nations at various times:

Here's empty homes by geography: East, Central and West China. Note the same breakdown as the first chart.

Empty homes by tier: first, second and third, with the third-tier cities in the worst shape.

A breakdown by city:

Here's the vacancy rate for commercial housing 商品房, the new homes built by commercial developers:

Here's a breakdown by type. The first is 商品房, the next may be very similar to 商品房, but it is lower priced homes built as part of government policy. Teardowns are the homes built for people who have their homes demolished. Housing reform related to people who received homes from the government as part of SOE reform or purchased formerly public housing.

Here's affordable housing vacancies by income, lowest to highest, left to right.

Empty home ratios by area:

Empty home ratio as percentage of household assets (right):

This chart shows the risk of losses on occupied versus empty homes in various price decline scenarios, from no drop to a 50% drop.

Here's a projection of credit risk, the insolvency rate in various price decline scenarios.

English coverage: Over 20% of urban properties stay vacant
More complete coverage from WSJ: More Than 1 in 5 Homes in Chinese Cities Are Empty, Survey Says
Property firms cite China's still-low urbanization rate—54% in 2013—as reason to continue to build. But the survey pointed out that inventory levels are too high and demand for housing stemming from new urban residents would have only a limited impact on clearing inventory.

An increase of 10 percentage points in the urbanization rate would result in only a 2.6% fall in vacancy rates, the survey said.

ZeroHedge has lots of housing data charts from Bank of America: Mindblowing Fact Of The Day: China Has Over 52 Million Vacant Homes

报告称城镇空置房近5000万套 沉淀资金4.2万亿
whether the property has to the inflection point , which seems to be a problem.

In Feng Jun, chief economist of the Ministry of Housing seems, "inflection point" is a false proposition, most indicators now the real estate market is growing, but the growth rate is declining, is not equivalent to a negative growth, is a normal market regulation.

Department of Housing and Urban Policy Research Center main Renqin Hong also said rigid demand in the market is still relatively strong, the property market as a whole is not so pessimistic.

Compared to the official cautiously optimistic, scholars seem to be more pessimistic.

Chinese household financial investigation and research center director Gan and his team plow through the country 29 provinces, 262 counties, 1,048 three-stage stratified random sampling of community access to investigation, in 2013 occupied housing vacancy rate in urban areas 22.4% where affordable housing vacancy rate up to 23.3%. Among them, the high vacancy rate also resulted in precipitation of 4.2 trillion in mortgage banking vacant housing, resulting in a huge waste of resources.

Gan plow believes that the current real estate market in our town there is a higher rate of owner-occupied housing has, excess inventory, vacancy rate, reducing the rigidity of housing demand, etc., shows that prices downward trend has been set, the inflection point is clear that China's housing market winter is coming.

It is reported that these reports have been presented to the central bank on other related sectors.

4200000000000 precipitation in vacant housing mortgage banks

The vacancy rate is often used in support of a property bubble, a few years ago had caused widespread concern, but due to unclear definition of vacant housing, sampling difficult, there has been no publicity related data.

National Bureau of Statistics in 2010, has responded that the current system of statistics on the real estate can not calculate this indicator vacancy rate. One reason is because the vacancy rate, including the concept of vacant unclear.

Feng Jun, chief economist of the Ministry of Housing also said that the current vacancy rate for the country does not have a precise official definition of "vacancy rate international mean, this city has the desire rental housing as the numerator, the denominator of the total housing stock, That's vacancy rate, we are now in this respect is no investigation, so the concept is difficult to draw the vacancy rate. "

Chinese Academy of Social Sciences Research Office of Urban and Real Estate Economics Ni Pengfei told 21st Century Business Herald reporter, whether it is or in the aggregate, the current official master of real estate-related data are very limited in the structure, but the accurate knowledge of the relevant data, such as vacancy rates, For making the right public policy decisions, stabilizing expectations is very important.

June 6, Investigation and Research Center Chinese household financial Southwest University of Finance gave an answer.

According to a survey of the center, very Chinese-occupied housing vacancy rate in urban areas, and rising rapidly. 2011 was 20.6%, and in 2013 rose to 22.4%. Much higher than the international level, pursuant to estimate the total amount of vacant housing in urban areas is about 48.98 million units.

The above vacancy rate includes two categories, one is a suite family reason uninhabited housing (referred to as "man room separation"), who isolated the cause of housing vacancy rate of 5.1%; the other is neither multi-Suite Family owner-occupied residential housing and no others (referred to as "multi-suite vacant"), sets the proportion of vacant urban households was 17.3%.

Plow Gan said the central bank to support the internal notice to the survey, a sample survey covering 29 provinces, 262 counties, 1,048 communities, we should say it with sample significance.

From a regional perspective differences in housing vacancy rate, the highest third-tier cities housing vacancy rate of 23.2%. A second-tier cities housing vacancy rate is slightly lower than third-tier cities, respectively, 21.2% and 21.8%.

Gan plow also said the high vacancy rate also caused a great deal of effective precipitation funds, the data show that as of August 2013, vacant housing occupied residential mortgage balances 4.2 trillion, which is a huge capital idle and waste.

Prices downward inflection point identified

Under high housing vacancy, Gan plow believe that prices downward trend once formed, the real estate market at greater risk, because once prices fall, vacant housing easier to insolvency, according to estimates, if house prices fell 50%, 49% of the value of vacant housing will be lower than the purchase cost.

In addition to the high vacancy rate, the center's survey also pointed out that our family owner-occupied housing rate is 98%, over 20% of households have more suites, this data has greatly improved in 2013 compared with 87% and 18.6%.

In addition, the 2014 first quarter data show that urban households rigid housing demand dropped further to 22.2%, down 6% and 2.4% respectively over 2011 and 2013.

According to Gan and his team plow estimates, without regard to the amount and new construction of affordable housing, "Twelve Five" period of supply, the existing stock of housing to meet the housing needs of reality, "Chinese urban areas to achieve a rigid upper housing needs about 23 million units, the upper limit can be achieved to improve the type of housing demand of about 9.5 million units, a total of 32.5 million units, while urban areas households currently own 48,980,000 units of vacant housing, commercial sale of approximately 3.5 million residential units, the total supply to 52.48 million housing units, the existing stock of housing can meet the current demand for housing. "

"China's housing stock surplus, and many other issues, such as high vacancy rate indicates that prices downward trend has been set, the inflection point is clear that China's housing market the upcoming winter," Gan plow think.

Ni Pengfei that the potential incremental real estate oversupply, however, NI believes that a more prominent problem is the problem of structural imbalances, there are many cities have serious excess capacity, "compared to the overall inflection point of view, it may be more accurate to say the local inflection . "

To address the high inventory, high vacancy rate risk, Gan plow that the core of the regulation is to revitalize the stock and reduce waste. In the short term, can be exempted from rent taxes, regulate the rental market to protect the interests of both sides hire, let vacant housing produce benefits, while facilitating the flow of labor. In the long run, through the multi-Suite Family levy property taxes, raise the cost of holding vacant room, activate vacant housing.

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