The industry that has traditionally powered about a quarter of GDP has been in a downward spiral that policymakers have struggled to halt

The industry that has traditionally powered about a quarter of GDP has been in a downward spiral that policymakers have struggled to halt

All across China, from Beijing in the north, to Shenzhen in the south, millions of newly built homes stand empty and unwanted. There were nearly 391m sq metres of unsold residential property in China as of April, according to the National Bureau of Statistics. That is the equivalent of Manchester and Birmingham combined – and then some – sitting as vacant, unwanted property.

This glut of idle property has caused a headache for the government, shaken the world’s second largest economy and raised tensions over the purpose of housebuilding in a nation where property investment had been viewed as a safe bet.

Since the real estate sector was sent into a tailspin in 2020, caused by the pandemic and a sudden regulatory crackdown, the industry that has traditionally powered about one-quarter of GDP has been in a downward spiral that policymakers have struggled to halt.

The crux of the problem is that, with shaky faith in the economy and big property developers failing to deliver on paid-for apartments, potential homebuyers are keeping their money out of the market.

  • Flying Squid@lemmy.worldMEnglish
    402·
    6 months ago

    What China needs to do is figure out a way to export this property to America, which needs more affordable homes.

    That’s doable, right?

    • viking@infosec.pubEnglish
      83·
      6 months ago

      I live in China. Trust me, you don’t want to have those homes in the US. The house I live in has been completed in 2016 and I’m the first tenant, moved in in 2018, and it’s got more issues than my dad’s house from 1965. Houses here are built as cheaply as possible, skimping on building materials, safety, plumbing, insulation, wiring, etc.

      The pricing bubble is just a joke on top. The actual value of the real estate here should be about 20-25% of what it is in reality - for example if I were to buy the house I’m renting right now, I’d break even after 114 years. Not taking any repairs or interest into account.

        • CosmoNova@lemmy.worldEnglish
          412·
          6 months ago

          We’re talking about high rise buildings with cardboard mixed into the concrete that collapse within less than 5 years in many many cases. They often don’t have plumbing or electricity as they are only constructed to get people to invest in property, not to live in them. US citizens really don’t know how much regulations and their enforcement are doing for them.

          • zephyreks@lemmy.mlEnglish
            24·
            5 months ago

            How many new builds have collapsed in <5 years? If you’re claiming many many, you should be able to cite at least 5, right?

        • dogslayeggs@lemmy.worldEnglish
          182·
          6 months ago

          Nah, the situation is way different in the US. The construction quality is way way better due to building codes and actual enforcement of that. Though some construction does fall through the cracks, it’s a good bet that the vast majority of construction here is safe. There is a pricing bubble here, but that’s for different reasons. And renting here is nowhere near as cheap as this person says. They said it would take 114 years to pay back the cost of a house compared to renting. In the US, rent is usually slightly more or even much more than a mortgage and goes up over time, so your worst case scenario is less than 30 years.

          • KevonLooney@lemm.eeEnglish
            72·
            6 months ago

            Yes. One reason why new housing in the US is expensive is because there are way more regulations now than there were years ago. Houses now are much safer and built better. But that makes them more expensive.

            • dogslayeggs@lemmy.worldEnglish
              61·
              6 months ago

              Tell me about it. I’m in the middle of construction right now, and the various hoops I’ve had to jump through and mazes of codes I’ve had to navigate are insane. And it all makes things so much more expensive. And the number of inspections and permit plan check meetings I’ve had to do has taken so much of my time.

              I probably shouldn’t have tried to GC this myself.

              • KevonLooney@lemm.eeEnglish
                4·
                6 months ago

                Remember that all of those regulations are for a reason. Sometimes the reason is "contractors donated money to an elected official, but it’s usually a good result. It’s better to have higher quality than lower.

          • zephyreks@lemmy.mlEnglish
            410·
            6 months ago

            Lmao have you seen the new builds in California? It’s not that you can punch through walls, but that you can literally fall through them. “Fire codes” nominally exist, but good luck enforcing them. All the work is shoddily done, things leak (for the one time a year it rains), the garage has exposed nails everywhere, and the doors are barely slapped together. Cabinets are basically an afterthought, the floors are basically hollow, and you can hear everything from your neighbour, your upstairs floor, and the street. A 2b1b in San Jose rents for $3700 a month, but sells for $1.2 million. Your mortgage is a $6400 monthly payment, plus $1200 in monthly property tax, plus home insurance and maintenance. US homes in prime real estate markets are profitable solely because of housing appreciation.

            If you’re talking about a place in Detroit? Yeah, ROI is high, but so is risk, and housing appreciation is low.

            Think about it. If rent was more than the corresponding mortgage, everyone with any amount of capital would acquire infinite homes to fill the gap. The efficient market hypothesis isn’t perfect, but it applies here.

            Edit: if you do things yourself, unfortunately you don’t get the luxury of corrupt and negligent officials so you probably have to build a proper home. Such is life.

            • dogslayeggs@lemmy.worldEnglish
              111·
              6 months ago

              I’ve lived in Los Angeles for over 20 years, so I think I have seen what construction is like in California. And I have family in other states who work construction, so I also have an idea of how much stricter the building codes are here in CA (including how much stricter the building inspectors are). Almost everything you complained about is about workmanship or level of finish, not actual build quality. It might not be very sound proof, but it almost definitely won’t fall apart under normal use (there’s a reason that condo in Miami was such huge news). Also, if you are able to fall through a wall with 16" on-center studs and 1/2" drywall then you must be way more dense than I am, since I would have to run fast to get enough speed hitting shoulder first to break through, let alone a slow speed fall into a vertical surface. I’ve never been to China, so I can only repeat what I’ve heard that the quality is much lower than in the US.

              As far as you rent vs buy example, you took the extreme case of Silicon Valley. Even in Los Angeles you can buy a single family home for $1.2M that rents for $6k/mo. You don’t even have to look at Detroit. Your example is also off. A 2b 1b apartment rents for $3700, but a condo of that size is $600k not $1.2M. And the mortgage on $600k is roughly $3200/mo plus $600/mo in taxes. If you look at single family homes, yes you are starting at $1.2M, but those are minimum 3br (or very large 2br) and absolutely not renting for $3700/mo. If you go away from the extreme case of SV and somewhere completely normal like the nice suburbs of Indianapolis, you can buy a small house for $300k that rents for $2000/mo.

                • dogslayeggs@lemmy.worldEnglish
                  91·
                  5 months ago

                  https://www.redfin.com/CA/San-Jose/1995-Sumatra-Ave-95122/home/1729649

                  https://www.rent.com/california/san-jose-houses/3-bedroom_2-bathroom?property-type=houses&bbox=-121.8580,37.3009,-121.8151,37.3520

                  I can link things too. The house you linked was last sold 40 years ago for $126k, so the person who owns it is renting it out for many times more than their mortgage. You might not be able to rent out a place for more than a mortgage today in that specific city, but if you own it for 5 years then you might be able to. Also, 2br 1ba single family houses in San Jose are fucking weird. If you start looking at 3br 2ba houses in that area then it gets a little more normal. If you look at 2br 1ba condos, the prices are also more normal. But you ignored what I said about Silicon Valley being an extreme case.

                  90% of the country you can buy for less than renting. You asked why anyone would rent when buying is cheaper. And the answer is because buying is hard. You need to have a lot of money saved up, which most renters can’t do. You need to be able to pay for repairs, which most renters can’t do. You need to know you aren’t moving jobs any time soon, which a lot of people don’t know. And nowadays you are bidding against corporations and investors who are bidding full cash, and sellers would prefer to do that instead of waiting on a mortgage approval that might fall through.

                  • irreticent@lemmy.worldEnglish
                    51·
                    5 months ago

                    But you ignored what I said about Silicon Valley being an extreme case.

                    That’s because they’re not arguing in good faith.

                  • zephyreks@lemmy.mlEnglish
                    47·
                    5 months ago

                    So… I take it you’re not from San Jose? Overfelt High is notoriously a highly minority-dominated, economically-disadvantaged, high-crime area. It’s next to the 101, segregated from the rest of the city, has obscene noise pollution, and, again, is notoriously economically-disadvantaged. You would not want to live there.

                    Edit: the fact that you would even link to that house shows how out of depth you are in this. That’s fine… I guess LA is an easier housing market to understand. Maybe the Bay Area is different, but you still should really not be linking random shit anyway. It shows that you’re willing to make arbitrary claims without sufficient knowledge on the issue.

        • dumblederp@lemmy.worldEnglish
          4·
          5 months ago

          G’Day from the land down under of dogshit-quality housing-bubble-overpriced new builds. God I love how much money corporations are making.

        • njm1314@lemmy.worldEnglish
          3·
          5 months ago

          Seriously, that describes what I’ve seen in the housing market these days to a T

      • zephyreks@lemmy.mlEnglish
        43·
        5 months ago

        You wouldn’t want US homes in Europe, either. Most of the world has astonishingly shit construction in the name of higher profits and the understanding that housing has very limited lifespans.

        Some US homes are great - robustly built, well-insulated, quiet, no leaky sewage, no leaky building membrane, wires routed properly, etc. Unfortunately, a lot of them were built decades ago. If you’re evaluating them in terms of materials or construction quality, US housing quality has gone straight off a cliff. Sure, there’s a bunch of glass facades on new buildings, but they hide the fact that sound insulation between units is nonexistent, the heat insulation is barely slapped together, the outlets aren’t all plugged in, and the hot water either turns completely on or completely off. Tour a new California townhouse and tell me again that it’s not built as cheaply as possible. Developers have figured out how to be stingy on everything you can’t see and instead dump money on fancy appliances and a marble countertop… Even if the toilet clogs if you look at it funny and you can hear your neighbour three doors down humming to himself.

        Meanwhile, most US new build apartments are 5 over 1s, which are notorious for being a tinderbox. Though, US fire code is really well done, so if there’s a fire odds are you can make your way out in time.

        • viking@infosec.pubEnglish
          1·
          5 months ago

          Oh true, my dad’s house that I used to compare the ones in China to is in Germany.

          • zephyreks@lemmy.mlEnglish
            23·
            5 months ago

            Yeah, German houses are so nice man. Like I don’t think I could get a US builder to build me a German house if I tripled their budget. They just don’t know how.

    • gravitas_deficiency@sh.itjust.worksEnglish
      272·
      6 months ago

      The construction quality is… shall we say, not great. Pretty sure lots of it would not pass code in the states - let alone Europe, Korea, or Japan.