According to Sound of Hope, in the first half of 2022, the volume of transactions in China’s real estate market fell by more than 50% compared to the same period last year. From January to May this year, sales of commercial real estate in China fell by 23.6% , and sales of residential real estate fell by 34.5% compared to the same period last year.
According to 163.com, the vacancy rate of houses in big cities in China remains high, mostly between 20-30%.
Chinese language media Kanzhongguo reported that in order to revive the gloomy real estate market, the government in Yulin, Guangxi, has asked civil servants to go to rural areas to sell houses that have been backlogged for a long time. On one hand, it is to destock the housing market, and on the other hand, to urge rural population into cities.
Civil servants, in addition to receiving a certain amount of money on the sold houses, can also be promoted based on this. These are considered motivations for them to actively sell homes, amid a decrease in the number of homebuyers in the city due to excess supply over demand.
Current affairs analyst Xie Tian said in Kanzhongguo that the banking system in China had reduced requirements for interest, interest rate, and down payment to urge people to buy houses.
He said that this decision has many potential risks and called this action “drinking poison to quench thirst.” Because lenders in rural areas often do not have a good and stable income source. Therefore, the Chinese banking system will likely face a series of bad debts.
Xie said that to deal with the inventory of houses, many real estate companies in areas like Henan province have launched a “special” program: exchanging houses for agricultural products. Accordingly, farmers can use wheat, garlic, or other agricultural products to buy houses.
Xie commented that this would pose a risk to both real estate companies and farmers. He explains:
“This is not a good thing for both parties. For example, how many tons of garlic do you use to buy and sell a house? What if the price of garlic suddenly drops? If there is a big drop, will these developers who sell houses lose a lot? If the price rises, farmers will lose a lot.”
“The key is that the price is uncertain, which means that the impact on real estate prices is also very large, and the volatility is also very large , so it will cause confusion in the market.”
Xie added that he hasn’t seen any country’s government asking civil servants to sell homes in rural areas. This shows that the economy and estate market in China is in a particularly difficult situation.