The size of unfinished, pre-sold homes in China is about 20 times the size of property developer Country Garden as of the end of 2022, according to a Nomura report on Wednesday.
Country Garden has been the largest non-state-owned developer in China by sales. It ran into financing troubles this year, and defaulted on a U.S. dollar bond last month, according to Bloomberg News.
“We estimate that there are around 20 million units of unconstructed and delayed pre-sold homes,” said Nomura’s Chief China Economist Ting Lu and a team.
About 3.2 trillion yuan ($440 billion) is needed to complete those remaining units, according to the analysts’ estimates.
The article relates that last year, delays in construction of homes in the projects resulted in a large number of buyers stopping payment of their mortgages (and, although not mentioned in the article, protests). Thus, the article warns, "the issue of home delivery could turn into a social issue and endanger social stability". The solution, according to the article, may require the intervention of the Chinese government, although it doesn't state what intervention might be needed.
Sounds like Great Depression territory . . . .
ReplyDeleteI'd read or seen a video somewhere that discussed that China was experiencing deflation for certain manufactured goods, so it might well be.
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